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AIMp: Tax reform could lead to locum shortages and pharmacy closures

The IR35 tax reform could discourage pharmacists from considering self-employment, resulting in a gap in the locum workforce and “unplanned” pharmacy closures, AIMp has warned.

The introduction of the new tax rules – also known as “off-payroll” working – could have a “deep impact” on medium-sized pharmacy businesses’ ability to deliver services, Leyla Hannbeck, CEO of the Association of Independent Multiple Pharmacies (AIMp) wrote in a letter to the Treasury yesterday (February 13).

Medium and large organisations – which the HMRC defines as having a “turnover of more than £10.2million, a balance sheet total of £5.1m and/or more than 50 employees” – will be responsible for determining the tax status of the locums that work for them from April 6.

Under the proposals, pharmacy businesses will be responsible for determining if the locum pharmacists they hire should pay income tax and national insurance contributions and cover those costs if appropriate.

A number of pharmacy organisations, including AIMp, warned last year that under current plans, locums working in community pharmacy could be mistakenly defined as “employed” for employment tax status. This would make working as a locum “untenable” because they would pay the same tax as employees, but without the same access to employee rights, the organisations argued.


The tax reform “may put people off being self-employed and put more people into early retirement”, Ms Hannbeck told C+D today (February 14).

Pharmacies cannot always afford to employ another full-time employee and locums might not want to enter into full-time employment, she added.

Pharmacies can “legally function” only when a qualified pharmacist is on the premises and “any shortage of locum pharmacists will certainly cause unplanned closures of pharmacies”, Ms Hannbeck wrote in her letter to the Treasury.

“The ability to select individuals at both long and short notice, from a resource group, with specific training and experience for a specific gap that needs filling is critical,” she added.

Review IR35

She added that HM Revenue and Customs (HMRC)’s check employment status for tax (CEST) tool is also “not fit for purpose”, as it is not “refined enough” to reflect the working practices of locum pharmacists.

Her view is shared by Umesh Modi, a chartered accountant and a partner at Silver Levene LLP.

“It is not enough to solely rely on HMRC’s CEST tool, which is not fit for purpose. The locum workforce will surely be destabilised, and most will be re-thinking their current long-term engagements, which will have a negative impact on the community pharmacies that rely on their specialist skills as well as detailed knowledge of their patients requirements.”

Ms Hannbeck invited the Treasury to start discussions with the sector on how the IR35 regulation could be revised.

The House of Lords Finance Bill Sub-Committee is set to analyse the impact of IR35 on large and medium-sized organisations as part of its inquiry into the draft Finance Bill 2019-20. Earlier this month (February 4), it invited stakeholders to submit their evidence to the inquiry by February 25.

Ms Hannbeck told C+D that the organisation decided to write the letter to the Treasury now as it hopes the concerns it raises will be considered by the inquiry.

The Treasury has been approached for comment.

How will the introduction of IR35 affect your business?

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