FIRMS in Hampshire are being urged to take action after new tax laws came into force.

The changes in tax legislation, which have come into effect this month, mean some partners in professional practices will be treated as employees for tax purposes.

HM Revenue and Customs (HMRC) has introduced three new tests to determine whether members of limited liability partnerships (LLPs) should be considered partners or staff.

The conditions will focus on the amount partners draw without reference to the company’s performance, the level of influence on management decisions, and the amount of capital invested and at risk by the individual partner.

If the partner meets all three conditions, they are regarded as a salaried “employee” for income tax purposes.

The changes have led Richard Green, managing partner at Southampton-based accountancy firm Smith and Williamson, to issue a warning to businesses in the county.

He said: “Doing nothing is not an option for firms involved in disciplines such as law, accountancy, chartered surveying, urban planning and architecture.

“There is clear concern as to how these changes will affect businesses under limited liability partnerships arrangements, as well as individual partners themselves.”