LLP: Employee Or Member?

• Published date: 13 October 2021
• Law Firm: Berg Kaprow Lewis
• Author: Mr Anthony Newgrosh

Although we are all familiar with the adjective 'self-employed', it is a logically nonsensical term: you cannot as a matter of law enter into a contract of service with yourself so as to become your own employee.

By the same token, you cannot be both a partner in an English partnership and an employee of it: but the position is much less clear when it comes to an LLP established under the Limited Liability Partnerships Act 2000 ('LLPA 2000').

Peter Wilson is the latest in a line of cases in which the question has been considered - in this case, by the Upper Tribunal in [2021] UKUT 0239 (TCC), on appeal from the First-tier Tribunal ('FTT'). What was at stake, in practical terms, was liability to Class 4 National Insurance Contributions.

Although it is for most tax purposes treated as if it were a partnership, an LLP is, like a limited company, a body corporate with a legal existence separate from that of its members. Absent any special rule, therefore, it would be no more problematic for an LLP to employ one of its members than for a company to employ one...