- Posted Monday March 27, 2017
Over the last few months, issues surrounding the employment status of people working for the likes of Uber and Deliveroo have been high on the business news agenda. While cab drivers and couriers might seem far removed from the world of primary care, we're expecting to see a number of similar instances arising in GP practices as some important new rule changes come into effect.
The question has been over whether individuals are working with these companies as self-employed operators, or whether they work for them and should therefore be entitled to benefits that generally come with being the employee of a given business such as sickness and maternity pay.
The IR35 rules relate to workers 'engaged through intermediaries', which in primary care is likely to relate to Personal Service Companies (PSCs) owned by locums being employed by a given practice.
Until now, it has been the responsibility of the PSC to decide whether the individual worker should be classed as an employee of the client (i.e. the practice). But from April 2017, major changes are being made to IR35 tax legislation which could have serious implications for any practice using locums that trade through limited companies.
The current IR35 rules have protected clients from tax liabilities where they have engaged locums through PSCs, but the new rules effectively remove this protection from ‘Public Authorities’, a definition which will catch most GP practices.
This means responsibility for applying the IR35 (or "intermediaries") rules will fall to the practice in cases where locum GPs are engaged through their own limited company.
Practices, rather than the PSC, will need to assess whether a locum should be regarded as an employee of the practice for tax purposes. If they are, the practice will be responsible for deducting PAYE and National Insurance contributions from payment, as well as for paying any associated income tax and employers' NI.
We would expect that engagements of an ad hoc locum with no fixed pattern at different locations would not be affected by the new rules, as they are genuinely self-employed, but a regular locum, such as someone covering maternity or long term sick leave, could also fall under these new rules.
In situations where the new rules do not apply, the PSC will be paid gross by the practice and account for tax at year end, as has always been the case. It’s also worth noting that, where work is completed before 6 April 2017 but the payment is made on or after 6 April 2017, the new rules will still apply.
HMRC has just published an interactive online tool which will help practices clarify whether the IR35 intermediary rules apply.
Our strong advice would be for all practices to urgently review their arrangements with both existing locum PSC contractors and any others they expect to hire in the coming months, and take expert advice if you're at all uncertain about where things stand for you.
Specialist medical accountants at RMT offer medical professionals advice and guidance that is tailored to the unique monetary and legislative environment in which healthcare industry workers live. For more information visit their website.