Who is responsible for deciding on IR35 status in the NHS? And what are the implications of the new rules introduced in April 2017? You might like to carry out a health check on your approach to locum staff, Robert Woolley of HPH Accountants LLP explains.
IR35 has always been a thorny and complex issue and it’s being scrutinised again in the National Health Service in the light of changes which took effect at the start of the 2017-8 tax year.
These regulations are essentially there to ensure that individuals who provide services through an intermediary pay the correct amount of tax. Immediately we are confronted with the question of who is genuinely self-employed and who might be deemed, in fact, to be an employee.
In the NHS, where there is a great deal of use of ‘locum’ staff, the whole issue is high profile.
Now, it’s no longer the responsibility of the intermediary to make a judgement about the application of IR35, but rather the ‘public authority’ itself. Where the rule does apply, it’s the responsibility of the ‘fee-paying’ NHS body to deduct tax and NI at source.
Originally, the advice from NHS Improvement had therefore been for health service managers to put agency, bank and locum staff on the payroll along with PAYE employees. It has become clear, however, that the Revenue expects decisions to be made on a case-by-case basis rather than in a blanket way.
According to their instructions to colleagues, any adjudication on an individual’s status must be done ‘fairly, accurately and take into account all relevant factors, including representations which may be provided by the individual.’
Thankfully, there’s a simple online tool (www.gov.uk/guidance/check-employment-status-for-tax) provided by HMRC which helps to decide on an individual’s status, although there may also be a case for taking professional advice where any complexities arise.
If you require any assistance with employment status issues don’t hesitate to contact the HPH team.
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