According to a Financial Times report published on 20 October, HM Revenue & Customs (HMRC) has revived investigations into partnership arrangements following its victory in a case against hedge fund manager BlueCrest Capital Management.
Some firms are negotiating with HMRC over their historic tax positions, while others are considering changes to partners’ rights, capital contributions and governance arrangements to avoid falling foul of rules designed to prevent businesses from treating employees as self-employed partners.
The ruling also raises questions for professional services firms, including the Big Four, whose UK operations use LLP structures.
When is a partner really an employee?
The dispute centres on the UK’s salaried-member rules, introduced in 2014 to prevent LLPs from using partnership arrangements to avoid employment-related taxes.
Under the legislation, an LLP member can be treated as an employee for tax purposes if all three conditions are met:
Remuneration: At least 80% of their expected remuneration is effectively a disguised salary rather than a genuine share of the partnership’s overall profits.
Influence: They lack significant influence over the affairs of the partnership.
Capital: Their capital contribution is less than 25% of their expected disguised salary.
In July 2026, the Supreme Court unanimously dismissed BlueCrest’s appeal in a dispute involving approximately £200 million in potential tax liabilities.
Crucially, the court ruled that a partner’s influence must derive from legally enforceable rights and duties under the partnership’s governance arrangements. Having substantial operational responsibilities, managing large amounts of money or exercising informal influence is not necessarily sufficient.
The case has been remitted to the First-tier Tribunal for further consideration under the Supreme Court’s interpretation of the rules.
Implications for the Big Four
Deloitte, EY, KPMG and PwC operate UK businesses through LLPs, making the legal distinction between partners and employees directly relevant to their partnership arrangements.
The judgment raises questions about the rights exercised by different categories of partners, particularly where remuneration, governance rights or capital contributions differ.
KPMG UK, in an analysis published shortly after the judgment, described the decision as an important victory for HMRC and advised businesses operating as UK LLPs to review their position under the salaried-member rules.
However, the Financial Times report does not identify any of the Big Four’s UK LLPs as being under investigation or having breached the rules.
The wider implications extend beyond tax. The judgment highlights a fundamental question about modern professional services partnerships: how much ownership and decision-making authority does a partner actually possess?
For firms operating through LLPs, the answer may now carry substantial financial consequences.
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About the author: Claudine Cassar is the founder and editor of Big4News, covering audit, consulting, regulation and governance across Deloitte, PwC, EY and KPMG.