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'Our concerns about how the locum tax reforms could affect pharmacies'

“We co-hosted an event with HMRC to look at how the tax status of locums is determined”

Questions remain over how the IR35 tax reforms should be applied to pharmacies and locums, says Company Chemists’ Association's (CCA) Rebecca Lucas

Today, many people choose to work in diverse and flexible ways, which can have a direct impact on their tax status. This has formed the basis of recent high-profile court cases, such as TV presenter Lorraine Kelly’s [which ruled in March that she was self-employed].

These changes raise questions for the community pharmacy sector, as we navigate new working practices. We also need to review what we consider to be ‘normal’ practice to ensure that how we operate reflects current case law.

In recent months, the CCA has been leading the sector's engagement with Her Majesty’s Revenue and Customs (HMRC) on these issues. We co-hosted a seminar with representatives from HMRC’s compliance teams in February. Delegates attended from organisations across the sector, including government bodies, regulators and locum agencies.

First, we looked at government plans to extend IR35 tax reforms to the private sector. These plans will mean that businesses will need to decide if the people they contract fall inside the IR35 regulations (ie ‘on’ the payroll) and ensure they pay the right tax and national insurance contributions (NICs).

Secondly, we looked at HMRC’s engagement with pharmacy as part of its increased scrutiny of how locums are used.

These topics are both reliant on the same determinants, or "tests", to assess employment tax status.

IR35 legislation is a crackdown on the use of intermediaries, including personal service companies [an individual’s limited company selling their self-employed work]. The reform promotes equal payment of tax for workers who do the same job irrespective of their actual employment status. From April 6, 2020, the responsibility for assigning the right tax status for locum pharmacists will fall to their employer. Pharmacies that meet the Companies House definition of a small business will be exempt from this.

Another big change from April 2020 is that the employer will be liable if tax is not correctly paid. There is a risk that some business owners will conclude that everyone they engage in work is inside of IR35 and ‘on the pay-roll’. However, this could go against the interests of legitimately self-employed workers.

In addition to IR35 changes, HMRC is directly engaging with businesses and scrutinising the current use of locums to determine whether they have been working in an employed capacity. This involves assessing the arrangement between the employer and locum through some key determinants or "tests" of employment status.

We have concerns about how applicable these tests are for pharmacy. For example, a locum may sign in as the responsible pharmacist, which could be seen as holding an office of the company – being an office holder can be an indicator of employment.

Or it could be inferred that the locum may be under the control of the superintendent pharmacist, and similarly classed as an employee. Also, we think it would be unusual for a business to accept a locum they hadn’t directly booked, while still paying the original booking, which could render invalid the right to substitute your services for another’s – another test – again indicating an employed status.

We've also raised concerns with HMRC about their ‘check employment status for tax’ tool as an instrument for assessing an individual's tax status. We are not confident that it is refined enough to determine employment status for pharmacists. We've asked HMRC to consider our feedback and provide tailored guidance that considers the contextual factors that affect our sector.

We are worried that the proposed changes and increased activity come at a time when pressure on workforce supply in pharmacy is increasing and the impact of IR35 changes to locums working in the public sector has not been assessed.

There is still much to be done to develop an understanding of how to determine the tax status of pharmacy locums and contractors. We will continue to work with HMRC and the wider sector and to share our progress. We are determined to do all we can to help provide the clarity needed to correctly assess the tax status of locums.

The government is consulting on the IR35 regulations. Find the details here.

Rebecca Lucas is policy and programmes manager for the CCA, which represents the UK’s largest multiples and supermarket pharmacies


M Yang, Community pharmacist

Not sure about big multiples, but I doubt independent contractors will go to the trouble. When have locums working for independents ever been asked to sign a contract on paper? It's all handshakes and spoken agreements. Why do the extra paperwork when there was none to start with?

Din Patel, Manager

A locum is not a business. He is a disguished employee.
He is told hours to work. The shop opens at 9am. He cannot say, he will start at 10am every day.

He uses the work computers, not his own. He is obeys the protocols and operations of the shop. He is dictated to  at every level and how the work is done.

It is a nonsense to suggest he is some sort of self-employed one man bandit business who dictates how he works,  and how he does it.

HRMC should make the declaration that locum pharmacists will be subject to PAYE deductions. Pay the fair share of tax.


Thomas Davis, Locum pharmacist

Completely disagree. 

I choose what days I work, what sector (community/industry), what country I work in (wales/england), what rate I will accept, how far I’ll travel, how far in advance I book etc etc

I have a private pension as I don’t receive one from an employer, I pay for all of my fees myself, I have private indemnity insurance, currently have no sick pay insurance, have paid for extra qualifications myself as they aren’t funded by an employer, no bonuses, etc etc

The list goes on.

We aren’t told hours to work. We are given the options and then either choose to accept or don’t. There is no uniformity to rates from different multiples or independents.

Yes we have to follow the procedures of the shop on that day but as a pharmacist I have the right to refuse to do things I am not comfortable with. I won’t hesitate to close a store if I think it is understaffed and unsafe regardless of whether the regular pharmacist or area manager thinks that it is acceptable.

Thomas Davis, Locum pharmacist

(accidentally posted twice)

Andrew Jukes, Locum pharmacist

Thanks I posted that, also under the article "How will locums be affected by the IR35 tax law changes? ".............I can't add anymore but to say I appreciate your comment............ No more in DENIAL.....Eyes wide open...Assess the risks, mitigate...take ACTION and protect the interests of staff, businesses and patients alike...2020 (TWENTY TWENTY is when its due to come in).....Thats:

T W E N T Y  T W E N T Y .........No rumour, no if , when or a maybe....It's CATEGORIC FACT.Thanks Andrew

Andrew Jukes, Locum pharmacist

It is very encourgaging to see that this important issue is being raised as the risks for businesses, locums and patient safety need to be appropropriately assessed and mitigated against. This ia a good article and helps support to raise awareness and investigate the issues.

I have been reserching IR35 since the public sector roll out and include here an article to raise awareness and challenge relevant Pharmacy bodies to act in ADVANCE the private sector roll out in 2020.

I thank you sincerely for addressing this topic. I have been researching IR35 since it was introduced into the public sector in March 2017. I am aware of not only salary reductions for locums but severe 'secondary effects' causing service deterioration, with less locums as they leave service due to lower wages.In addition a reduction in available locum posts has been experienced by some recruiters, as budgets contract as there are added costs to businesses to operate this framework. The EMPLOYER will be responsible for assigning a locums tax status under IR35, in accordance with HMRC definitions, and then taxation will be deducted at source rather than in the past via, for example a locums accountant on behalf of HMRC when annual accounts are submitted.. If operating a limited company for example there will be a significant pay reduction when you compare corporation tax versus IR35. I have felt this personally to such an extent that it comprimised my whole work viability and created many financial obstacles. The 'secondary effects' are not on the radar of most of the profession, with all due respect, but they are real and are still being felt now from the public sector roll out.. One day soon the coffee beans will provide a waft that gets noticed. This is NOT going away.

What has staggered me is the lack of 'pick up' of this topic by the profession generally ....A head in the sand/'sleep walking into danger' stance. IR35 is now being consulted in government for the private sector, and will be live in 2020 I am sure.

I am NOT an accountant and individual professional bodies and organisations are not either but they should have been sign posting on this a long time ago to prepare locums in advance for what is highly likely to impact upon them.

My advice, from research and experience, is for locums to seek robust tax advice from an accountant, as everyone has individual circumstances. Do not rely solely on HMRC's 'CEST' tool to determine IR35 status as its reliability is questionnable including counteraction in the courts by some locums incorrectly assigned.. A lot of employers going fowards will not permit the use of limited companies in 2020 and there will be no tax advantages using them anyway. The use of umbrella companies dictates the use of 'IR35 Compliant' versions but this will NOT totally avoid the HIGHER tax liability if deemed inside IR35 (that the employer decides), as deductions will be made by the employer BEFORE payment to the locum.. There are real risks to individual earnings, service delivery if locums leave, and impacts on businesses in terms of related costs. You cannot compare apples with lemons, BUT it is an 'indicator' to review what has happenned in the public sector.... Please research readily published articles via a general search..There has been some real damage done and it at least needs risk assessing generally, and for individuals to assess thier own circumstances via a qualified accountant.

An additional wealth of resource on IR35 is via ,who are in addition supporting a national campaign to halt the introduction of IR35 into the private sector.They also have a wide range of evidence and data on the impacts of IR35 and good quality articles.

I would say, learn more about IR35, be aware, risk manage and don't avoid whats coming as it will have consequences. Another 'can of worms' is the employee/locum or contractor status and how you may or may not be entitled to any benefits such as expenses etc if your position changes....All this needs to be factored in.

Well done on raising this issue ...I was wondering if I would ever see it addressed or if it would remain the issue to lay a carpet over in the long term and then just REACT when problems occur,rather than advise and mitigate the risks.It's so easy to avoid eyes in corridors, to park a difficult issue, or pass by on the other side of the road but that level of management of an issue will get us where we deserve ....NO WHERE!, and this is too important not to tackle NOW.

This is probably the single most important issue, given the impacts, non addressed i've seen in my entire career--It's not solely about an individual locums salary. It has impacts on services and patient safety....

*Could you manage a salary reduction?, if so by how much?

*Could you cope If you had less colleagues in your shop or business?

*What would be the financial impact on your business due to IR35?

*What would be the impact on the service and patients with less staff?

*Would patient safety be affected?

In addition IR35 will be adding into a 'perfect storm' of co-existing factors...such as budgetary cuts, rising costs, competition from online and other service providers in very challenging times.....We have already witnessed a 'round' of Pharmacy closures en masse and individually.Can Pharmacy businessess and locums alike afford NOT to care about this issue, going fowards?

Please research the issue......I hope this helps ...I'm sharing my thoughts from research and personal experience but if you have not considered this please seek professional advice in advance of the private sector roll out in 2020.

Heads in the sand don't tend to see very much!

A profession, professional organisations,businesses, employers and individuall professionals,, with respect, in ABSOLUTE DENIAL.

Makbulhusen Umerji, Community pharmacist

I asked my Accountant about This and He said that this will affect those that are Limited companies and not Sole traders; i am Presently working as a Locum; mainly for onee multiple and my tax status is as a sole trader as some years ago I owned a pharmacy Business and I am Schedule D registered.Also Modi in their Article on this subject have states that if You have a multiple source of income then you will be deemed and be treated as self employed; I am not sure if this includes dividend and or rental income.
The locum booking Department when I rang them a few weeks ago had never heard or been told anything from Their HR DEPARTMENT about IR35 and all the locums I've talked to had not been aware of this impending reality.

SP Ph, Community pharmacist

Amazing. Your post here is bigger and comprehensive compared to the original article!! WOW

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