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HMRC internal manual

Employment Status Manual

HM Revenue & Customs
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Salaried Members: Anti-Avoidance: Use of intermediaries

ITTOIA/S863G (2), (4)

If an individual works for the LLP and, to avoid being a Salaried Member, enters into arrangements so that someone else, such as a company, becomes a member and receives amounts due to the individual then:

  • the individual is treated as a Salaried Member,
  • the sum paid to the actual member in relation to the individual’s services is treated as being paid to the individual, and
  • the sum is treated as employment income of the individual.

The section applies to arrangements entered into on or after 6 April 2014.



This example shows the circumstances where TAAR applies.

J realises that he would be a Salaried Member. With the agreement of the LLP, he introduces as a member J Ltd. J Ltd receives the reward package that had been agreed for J.

These arrangements have been entered into to avoid the impact of the Salaried Member legislation. J is deemed to be the member, with the result that the sum due to J Ltd is treated as payable to J.

The LLP must account for PAYE and NICs on the amounts paid to J Ltd for the services of J. So if £100,000 was invoiced by J Ltd, the LLP must deduct the appropriate amounts of PAYE and NICs and account for secondary NICs on that £100,000.