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PDA: Locums may assist contractors in HMRC IR35 probe but ‘no obligation’ to do so

The PDA has advised locum pharmacists they “are under no direct obligation” to help contractors gather data for an HMRC investigation into off-payroll working rules - also known as IR35 - although they “may choose to do so to help ensure HMRC reaches a final decision". 

HM Revenue and Customs (HMRC) is currently undertaking an investigation into how pharmacy contractors engage off-payroll locum pharmacists and other off-payroll workers, the Pharmacists' Defence Association (PDA) said in a statement yesterday (November 4).

Under the investigation, some pharmacy contractors have in recent weeks contacted locum pharmacists to ask them to participate in data-gathering exercises on their work arrangements, the PDA claimed.

The union advised locums “that while they may choose to assist the large contractors to gather data, they are under no direct obligation to do so”.

Locums “may also want to consider the wider implications for their relationship with the contractor, if they become treated as an employee for tax purposes,” the PDA added, “as being considered an employee for the purposes of employment status would have implications for employment entitlements.”

A spokesperson for HMRC told C+D today (November 5) that the organisation cannot confirm or deny open investigations. Its role is to collect the tax and national insurance contributions due under UK law and intervene where necessary, they said.

The spokesperson added: “We are engaging with customers, advisors and representative bodies across a number of sectors to understand working practices and produce a view on roles and contractual terms where employment status is not clear. This also includes exploring how best to promote consistent tax treatment.”  


Pharmacy contractors could “be financially liable”


IR35 came into force  in April to ensure that individuals who are working like employees but through their own limited company, such as a PSC, pay the same income tax and national insurance contributions as others who are directly employed by a company.

Medium and large organisations – which the HMRC defines as having a “turnover of more than £10.2 million, a balance sheet total of £5.1m and/or more than 50 employees” – will be responsible for determining if the IR35 rules apply to the contractors they engage with.

The PDA warned that, “if HMRC determines that locums should be treated as employees for tax purposes, this will impact on whether tax is deducted from agreed fees before payment to the locum”.

This “could also cause the pharmacy contractor to be financially liable for any unpaid tax, that should previously have been due”, the union added. “This could be a considerable liability for contractors.”


Rowlands “confident” locums “are in compliance”


In a letter that appears to have been sent by Rowlands, seen by C+D, the multiple asked locums to fill out a “short questionnaire” focused on their engagement with the company as a locum over the past 12 months.

A spokesperson for Rowlands told C+D yesterday (November 4): “HMRC routinely conducts such reviews across all sectors. Community pharmacy is working with HMRC to explain the employment arrangements for locums, and the use of locum workers is common practice and ensures the stability of the pharmacy sector."

They added: “This is of particular importance in the current climate, where pharmacist shortages are an industry-wide issue. We are confident HMRC will find these are in compliance with regulations.”


CCA: HMRC must take "pragmatic approach"


A spokesperson for the Company Chemists’ Association (CCA) told C+D on Wednesday (November 3) that the organisation is “aware” of HMRC’s investigation.

“HMRC appears to be approaching their investigations from the position that locums may be ‘employees’ for tax purposes, which clearly conflicts with their publicly available guidance. The CCA is actively seeking to understand the full extent of the implications of the HMRC's investigations,” the spokesperson added.

They told C+D: “The CCA is concerned that any changes to the tax status of the locum workforce could negatively impact locums and the amount of tax they pay, it could reduce the flexibility of the workforce and therefore impact how businesses are run, and ultimately it could impact the care that the network can provide to patients and the NHS.”

They urged HMRC to “meaningfully engage with businesses, to fully understand the pharmacy model” and for it “to take a pragmatic and reasonable approach to establish how pharmacies can operate in the future and continue to deliver high quality care for patients on behalf of the NHS”.

Have your working arrangements changed since the introduction of IR35?

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