NHS revise IR35 guidance for off-payroll staff

05 June 2017

Revised guidance from the NHS says not to assume that all agency staff will fall inside IR35; each case should be assessed individually as to whether or not the reformed intermediaries legislation apples.

In the latest NHS provider bulletin updated guidance has been published. Pre 6 April 2017 NHS improvement anticipated that providers would need to ensure that all locum, agency and bank staff were subject to PAYE and on payroll for the new financial year.

NHS Improvement has said that this was not accurate and has set out their revised position:

“Updated guidance to NHS providers

The introduction of the rules has made clear that an assessment of whether or not IR35 applies should be carried out in a fact-specific way; that is, it should be applied on a case-by-case basis, rather than by a broader classification of roles. Therefore, NHS providers, and all others categorised as public authorities, will need to consider whether or not an individual in their particular situation is self-employed when they determine the application of the IR35 rules in that case. This consideration must be conducted fairly, accurately and take into account all relevant factors, including representations which may be provided by the individual.

HMRC has provided a simple tool to help determine whether an individual should be considered employed for tax purposes. Providers and individuals may find this helpful for guidance. This tool does not negate the necessity for careful case-by-case scrutiny.

NHS Improvement recognises this rule change has substantial administrative implications for providers. We expect all providers to comply in full with their legal obligations by ensuring that all locum, agency and bank staff are taxed appropriately following a proper analysis of their individual circumstances.

Failure to comply with the updated legislation in relation to IR35, and correctly assess the worker contract and/or notify the third-party agency of determination, could result in providers being liable to pay the equivalent PAYE deductions to HMRC. In addition, inaccurate assessments of individual circumstances could lead to unnecessary cost, time and expense, and this should be avoided. With regard to personal service companies, NHS Improvement recognises that NHS providers may contract with individuals through such entities.

Finally, NHS Improvement will not provide advice on individual cases and providers should seek independent tax advice where they consider this necessary and/or appropriate to resolve issues that may arise on consideration of specific cases.”

Useful information from HMRC