Q & A with John Machell KC
John Machell KC is the author of the 6th edition of Whittaker and Machell on the Law of Limited Liability Partnerships.
This will be included in our Partnerships online service.
What have been the biggest developments in the law of LLPs since the previous edition?
The most significant development in the last few years has been the proliferation of tax disputes between HMRC and LLPs and their members. This litigation has focused on legislative changes brought about in the mid-2010s to combat perceived tax avoidance as a result of the use of LLPs: the salaried member rules which were enacted to counteract the use of LLP membership as a way of avoiding employee PAYE obligations; and the mixed member rules which seek to reduce the use of corporate members to defer income tax payable by individual members. There have been a number of cases going through the tax tribunals, some of which have now reached the higher courts.
What areas of LLP law highlighted in Whittaker and Machell on the Law of Limited Liability Partnerships (6th Ed) are ripe for significant cases over the next few years?
There have been surprisingly few decided cases since the Limited Liability Partnerships Act 2000 was brought in to force 25 years ago on the topic of discretionary decision-making, such as the power of a majority of members to expel a member against their will, or the power of a remuneration committee to amend profit shares. This is a topic on which there have been in number of cases in other areas of law (such as employment, trust and commercial disputes) particularly following the Supreme Court decision in Braganza v BP Shipping in 2015. The sixth edition includes a substantially updated analysis of this area of law as it applies to LLPs in Chapter 17.
Are there any trends which have the potential to affect or disrupt the law of LLPs over the next few years?
I am not sure whether it will ultimately affect or disrupt LLP law, but there is rightly increasing political pressure to combat the misuse of entities with limited liability for criminal wrongdoing. It is now relatively easy to incorporate LLPs and companies using false or incomplete information and to use the entities in international criminal activity. There will, I think, be a focus on further legislative changes to make that more difficult.
What is the most challenging aspect of your role?
The most challenging aspect of my practice as a barrister is the day to day juggling of the demands of a range of cases from those involving purely commercial issues through to large family trust disputes. Cases rarely present themselves as neatly packaged points of law; they throw up an array of factual and commercial pressures often involving a long personal and emotional history for those involved. Clients live and breathe their cases, and it important to be available for them whenever issues arise and whenever they need support.
