LLPs and disguised employment relationships - insolvency risks

The clampdown on disguised employment relationships in limited liability partnerships (LLPs) puts employee members at risk in event of insolvency, warns John Young, legal director of Mishcon de Reya, but there are ways to minimise the impact

 

The introduction of new rules to combat disguised employment relationships in limited liability partnerships (LLPs) were introduced in 2014. Since then, many LLPs have focused on the tax implications of whether a member is treated as an employee.

Very little attention has been paid to the significant additional risk that employee members face compared to a self-employed member earning the same base pay should the LLP become insolvent.

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