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Locum pharmacist writes to CCA to flag varied approaches to IR35 rules

HMRC: Private organisations should provide a “status determination statement” for contractors
HMRC: Private organisations should provide a “status determination statement” for contractors

Locum pharmacist Tohidul Islam has written to the CCA to flag perceived controversial approaches taken by some multiples in relation to IR35 rules.

Some Company Chemists’ Association (CCA) members, including Lloydspharmacy and Superdrug, have been asking locum pharmacists to “provide personal bank account details” and are no longer allowing them to use their personal service companies (PSCs), according to claims from locums sent to Mr Islam.

Superdrug declined to comment when approached by C+D.

A Lloydspharmacy’s spokesperson said the instructions it shared with locums are not related to the introduction of IR35 – also known as off-payroll working rules – but are to ensure the multiple complies with “Money Laundering Regulations, Modern Slavery Act best practice and the Corporate and Criminal Offences Act”.

“Lloydspharmacy engages locums as an individual on a self-employment basis and therefore requires them to have a recognisable bank account, reflecting the name of the individual we are contracting with, for payment,” the spokesperson added.

Locums working for Lloydspharmacy have been encouraged to upload their personal banking details on Venloc – the platform the multiple uses to engage with locums – “as soon as possible”, according to screenshots that were shared with C+D.

A CCA spokesperson told C+D that the organisation “has received an email from Mr Islam, and we will be making no further comment”.

No blanket assessments

Mr Islam – who is the CEO of pharmacist support organisation The Pharmacist Cooperative – sought clarifications on the use of PSCs in relation to IR35 from an accountancy agency, he wrote in an email to the CCA, seen by C+D, on March 29.

“Forcing or coercing individual locum pharmacists to accept payment into personal accounts and not allowing them to use PSC when they have a legal right to do so may still be seen by HM Revenue and Customs (HMRC) as a blanket assessment and an excuse to not carry out individual assessments,” Mr Islam wrote in the email.

“We would urge your members to allow locum pharmacists to be given the choice of individual assessment and [to] avoid blanket assessments,” he added.

Mr Islam forwarded the claims he received from locums to accountancy practice Gorilla Accounting who, in a letter to The Pharmacist Cooperative, wrote: “We understand that some multinational pharmacy chains are looking to avoid the potential issues of IR35 rules by simply dictating that any locum they contract with is an individual, i.e., a sole trader.

“They are refusing to enter contracts or make payments to other entities such as personal service companies.”

While this approach might avoid the multiples’ IR35 concerns, “the question of whether a contractor/locum is actually an employee is still a live issue”, the accountants added.

Clients to provide a “status determination statement”

According to guidance from HMRC, published in January, “clients cannot apply a blanket status assessment across all contracts”. Instead, from April 6, medium or large-sized private organisations will be “be responsible for deciding contractors’ employment status for the services they offer, and should provide them with a “status determination statement” to explain where the IR35 rules apply, according to the guidance.

Locums will still be able to work through their PSC after April 6, according to the guidance. However, “some clients may change the way they wish to engage you and other contractors”, it advised.

“It is natural that businesses will consider whether limited companies or other intermediaries are the best way to engage you, and other contractors, if you are working like employees. This is a business decision for organisations to make, and organisations will be free to decide how they engage their workers,” according to the guidance.

What is IR35?

Initially expected to be introduced in April last year but postponed due to COVID-19, off-payroll working rules or IR35 will come into force on April 6.

These rules are coming into force to ensure that individuals who are working like employees but through their own limited company, such as a PCS, 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.

These rules do not apply to smaller-sized private sector companies.

Contractors can use an HMRC tool to check their employment status for tax purposes.

Source: HM Revenue & Customs

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