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UPDATE: Off-payroll working in the public sector - changes to the intermediaries legislation

6 April, 2017


HM Revenue & Customs

In the first article about this issue we signposted members to HM Revenue and Customs Technical Note on the changes to IR35 effective from 6 April 2017.

We have now learned that HMRC updated this Technical Note at the beginning of March with specific 'nformation for agents' and this can be accessed here.

As the introduction to the document explains, the main focus of HMRC’s additional Note is on the implications for contractors (in our case members working as locums) who have provided their services to a Public Authority end-client (the NHS) through a Personal Service Company (PSC). The summary guidance for members we are working on now will take a similar approach.

Members working as locums are probably aware that the current focus of the debate on the implementation of the revised IR35 legislation, is on NHS Improvement’s initial decision to deem all locum arrangements in the NHS as falling within IR35.

Our understanding is that challenges to this blanket, one-size-fits all, across-the-board determination are beginning to emerge in relation to the duty in the legislation that a Public Authority should exercise 'reasonable care' in deciding whether a particular contract with an intermediary is inside or outside IR35.

To state the obvious, the temporary staffing supply chains that operate across the NHS are complex and the initial impact of the way in which NHS Improvement and NHS Trusts, together with the various agencies involved, have chosen to implement the revised IR35 legislation has been to largely, if not entirely, exclude PSCs from those supply chains.

HMRC’s stance is that the changes to the IR35 legislation are not aimed at this and the exclusion of PSCs from NHS staff supply chains may not hold longer term.

More immediately, we appreciate that members on locum assignments who have had to accept their agencies’ recommendation and either enter into a standard Employment Agency and Worker type contract, or become the employee of an Umbrella Company (both of which are outside the scope of IR35 because PAYE and NICS are operated), will have a range of issues to contend with.

These will include their ability to claim travel and subsistence expenses. The aim of our summary guidance will be to cover and highlight the key points, including the treatment of business expenses, which members who have operated through a PSC until now should consider as they continue to pursue their careers and serve their patients as locums.

We want our summary guidance, although it cannot provide individual tax advice, to be as supportive to our members working as locums as possible, and if any member who has operated through a PSC would like to forward a question, comment ,or query of general concern to me in confidence we will aim to answer those that apply to the majority of locums in the final publication.

We will also try to answer other more specific concerns on an individual basis where this does not extend to personal tax advice.

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