In Charles Tyrwhitt LLP v HMRC [2021] UKUT 0165, the Upper Tribunal (UT) upheld the decision of the First Tier Tribunal (FTT) that found that bonuses awarded to five individuals whilst they were members of an LLP were in fact related to their former roles as employees. As such NICs amounting to about £1 million were due on the payments.

The FTT held that the scheme was for the benefit of employees and the bonuses paid were in respect of that employment. The fact that the terms of the schemes were amended was purely to allow the employees to keep their entitlement after termination of their employment. Had they simply have left the LLP instead, there would have been no doubt that the payments were employment related.

The LLP appealed on the grounds that the FTT had erred in law by failing to characterise the payments as shares of profits. The UT found that:

The UT held that the payments were from employment and the appeal was dismissed.

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External link

Charles Tyrwhitt LLP v HMRC [2021] UKUT 0165

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