Dominic Stuttaford and Sofia Casselbrant-Multala (Norton Rose Fulbright) review the NICs treatment of bonus payments by LLP to former employees who subsequently become members.
How members of a LLP should be taxed on their income has been a vexed issue ever since LLPs became popular following their introduction in 2000. Some of the issues were dealt with when the ‘salaried members’ rules were introduced in 2014. However difficulties remain; in Charles Tyrwhitt LLP v HMRC [2020] UKFTT 272 (TC) the First-tier Tribunal (FTT) was asked to consider how the rules should apply to members whose drawings in part reflected an incentive plan to which the individuals had belonged before they joined the LLP as members.
The facts...
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Dominic Stuttaford and Sofia Casselbrant-Multala (Norton Rose Fulbright) review the NICs treatment of bonus payments by LLP to former employees who subsequently become members.
How members of a LLP should be taxed on their income has been a vexed issue ever since LLPs became popular following their introduction in 2000. Some of the issues were dealt with when the ‘salaried members’ rules were introduced in 2014. However difficulties remain; in Charles Tyrwhitt LLP v HMRC [2020] UKFTT 272 (TC) the First-tier Tribunal (FTT) was asked to consider how the rules should apply to members whose drawings in part reflected an incentive plan to which the individuals had belonged before they joined the LLP as members.
The facts...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
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