Hedge fund Bluecrest Capital Management's £200m tax headache has just got a whole lot worse after the Supreme Court upheld HMRC's ruling that senior traders within Limited Liability Partnerships (LLPs) must be treated as employees for tax purposes. This unanimous decision leaves Bluecrest facing a substantial bill of nearly £200 million, covering the tax years 2014/15 to 2018/19.
The core issue at stake was whether members of LLPs should be taxed as employees or self-employed profit-sharers. The Supreme Court's verdict confirms that traders within LLPs will be subject to income tax and National Insurance contributions, effectively making them salaried members. This ruling could have far-reaching consequences for numerous professional services firms, including law firms and 'Big Four' accountancy firms.
HMRC initially raised the dispute after determining that almost all Bluecrest members – with a few executive committee members excluded – met the criteria for ‘salaried members’. The case has been heard through various tribunals, with initial findings suggesting that bonuses based on individual performance constituted “disguised salary”. This position was largely upheld in subsequent appeals, ultimately leading to the Supreme Court's definitive ruling.
The impact of this landmark decision extends far beyond Bluecrest. Professional services firms operating as LLPs may now face scrutiny from HMRC regarding the tax status of their members. This could lead to significant backdated tax bills and changes in how these organisations structure their partnerships and remunerate their members.
Michael Platt, founder of Bluecrest Capital Management, was ranked 12th on the Sunday Times Rich List last year with an estimated net worth of nearly £13 billion. The fund itself reported a substantial revenue increase to £130.8 million for the year ending 31 March 2025 – a 149 per cent rise from £52.6 million the previous year – highlighting the scale of the entities involved in this dispute.