LLPs remain attractive vehicles. But investment advisory firms need to be mindful of the greater risks involved in operating an LLP and take steps to protect themselves.
Jane Amphlett is a partner in the employment team at law firm HowardKennedyFsi LLP
LLP changes: Defining ‘employed’
The conditions on ‘disguised salaries’ – all of which must apply to trigger employee tax treatment in LLP partners – are:
80 per cent or more of the partner’s total remuneration is fixed or, if variable, is varied without reference to the LLP’s overall profit or loss; and
The partner has no significant influence over the affairs of the LLP; and
The partner’s contribution to the partnership is less than 25 per cent of its annual remuneration
Case study: The whistleblower hearing
In the Supreme Court ruling, a junior equity member of the law firm Clyde & Co LLP argued that she had been discriminated against because of her sex and had suffered various detriments, including her expulsion from the firm, because she had made ‘protected disclosures’ – that is, blown the whistle – about alleged bribery by a Tanzanian firm to which she had been seconded.
Partners are expressly covered by discrimination law, but she needed to show she was a worker in order to pursue her whistleblowing claim.
To do so, she needed to demonstrate that she was working under a contract (not necessarily in writing), that she was required to perform services personally and that the other party was not her client or customer.
The court held that the junior member satisfied these tests.
