Peter Wilson v The Commissioners for HM Revenue and Customs [2021] UKUT 0239 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Adam Johnson,Judge Jonathan Cannan |
| Neutral Citation | [2021] UKUT 0239 (TCC) |
| Subject Matter | 29 September 2021 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 29 September 2021 |
[2021] UKUT 0239 (TCC)
UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
Appeal number: UT/2020/0106
BETWEEN
PETER WILSON
Appellant
-and-
THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
MR JUSTICE ADAM JOHNSON
JUDGE JONATHAN CANNAN
Sitting in public by way of video hearing using MS Teams on 18 June 2021
Rebecca Murray instructed by Born & Co Chartered Accountants for the Appellant
Joanna Vicary instructed by the General Counsel and Solicitor to HM Revenue and
Customs for the Respondents
NATIONAL INSURANCE CONTRIBUTIONS – member of an LLP – whether contributions
payable as an employee or a partner – nature of the relationship between the appellant and
the LLP
1
DECISION
INTRODUCTION
1. This is an appeal against a decision of the First-tier Tribunal (“the FTT”) released on 20
May 2020 (“the Decision”). The FTT dismissed an appeal by the appellant (“Mr Wilson”)
against a decision of the respondents (“HMRC”) dated 21 March 2018 that he was a self-
employed earner for national insurance purposes in the period 31 October 2012 to 31 March
2014. The decision of HMRC was made pursuant to s 8 Social Security Contributions (Transfer
of Functions etc) Act 1999 and had the result that Mr Wilson was liable to Class 2 and Class 4
national insurance contributions.
2. Mr Wilson is a chartered accountant and an international tax specialist. He was engaged,
to use a neutral term, by Haines Watts London LLP in November 2011. Haines Watts are an
international firm of chartered accountants and Mr Wilson was engaged with a view to
developing a separate international tax department within the London Office of the UK firm.
Haines Watts London LLP (“Haines Watts” or “the LLP” as appropriate) operates as a limited
liability partnership. We set out below the FTT’s findings of fact as to the circumstances in
which Mr Wilson came to be engaged by Haines Watts. For present purposes we note that on
1 November 2011 various documents were signed by Mr Wilson in connection with his
engagement with Haines Watts:
(1) An agreement whereby Mr Wilson became a member of the LLP (“the LLP
Agreement”).
(2) A deed of variation to the LLP Agreement (“the Deed of Variation”).
(3) A side letter setting out further variations to the LLP Agreement (“the Side Letter”).
3. It is not clear why HMRC’s decision did not cover the period from 1 November 2011 to
31 October 2012, but nothing turns on that for the purposes of this appeal.
4. We shall consider the legislative framework governing liability to national insurance
contributions (“NICs”) in detail below. For present purposes, we note that where a person is a
self employed earner, that person is liable to Class 2 contributions. Liability to Class 4
contributions depends on whether the person is liable to income tax on the profits of a trade,
profession or vocation. Where income tax is charged on a member of an LLP in respect of the
LLP’s profits of a trade or profession, Class 4 contributions are payable by the member if they
would be payable were the trade or profession carried on in partnership by the members.
5. The income tax liability of partners is dealt with by Part 9 Income Tax (Trading and
Other Income) Act 2005 (“ITTOIA 2005”), which the FTT referred to as “the Partnership
Code”. Section 863 ITTOIA 2005 makes provision for the application of the Partnership Code
to LLPs carrying on a trade, profession or business with a view to profit.
6. The issues before the FTT required it to consider the effect of s 4(4) Limited Liability
Partnerships Act 2000 (“LLPA 2000”) which concerns the question of whether a member of
an LLP can also be employed by the LLP. There are a number of authorities in the context of
employment law which consider the effect of s 4(4) LLPA 2000, including the Court of Appeal
decision in Tiffin v Lester Aldridge [2012] EWCA Civ 35 and the Supreme Court decision in
Clyde & Co LLP v Bates van Winklehof [2014] UKSC 32. We consider these authorities in
detail below. In short, Mr Wilson’s case before the FTT was that he was in substance an
employee of Haines Watts and not liable to Class 4 NICs.
7. There is an issue as to exactly what the FTT decided in some respects. The FTT
summarised its conclusions at [181] of the Decision as follows:
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