HMRC has begun a review of proposed changes to the tax rules on partnerships, as part of a bid to minimise any tax losses.

The consultation will look at two issues: the disguising of employment relationships through the use of limited liability partnerships (LLPs); and arrangements for allocating profits and losses among partnership members. Any changes will take effect from 6 April 2014.

The move was originally announced in Budget 2013, when the government said it would be looking at removing the presumption of self-employment for some LLP members, to tackle the disguising of employment relationships through LLPs; and would also be addressing the manipulation of profit and loss allocations (by LLPs and other partnerships) to achieve a tax advantage.

In its briefing on the consultation, HMRC says that it will be examining profit-sharing arrangements where it appears that the main purpose is either to secure an income tax advantage for any person, or to allocate a partnership loss to a partner with a view to that partner obtaining a reduction in tax liability by way of income tax reliefs or capital gains relief.

It will also consider tax-motivated arrangements whereby one partner transfers profits to another as a result of a revised allocation of profits in return for payment that is not taxed as income.

HMRC says it welcomes views on the detailed design of the changes and on how to ensure that any impacts outside the specified targeted areas can be reduced without giving rise to uncertainty and avoidance. The deadline for comment is 9 August 2013 and interested parties can write to [email protected]