IR35 intermediary legislation: turning a sow’s ear into a silk purse

What is IR35 'intermediaries legislation'

The IR35 intermediaries legislation has been in force for many years, but up until April 2017, if they were trading through an intermediary e.g. their own limited company, it was up to the GP locum to decide whether this legislation applied to them or not.

In most cases, where the locum did have a limited company, they would have considered that IR35 did not apply to them, with their company billing the practice for the full amount of their fee, and the locum then taking a low salary from their own private limited company, paying tax and NI, but paying themselves in larger share dividends.

Funnily enough, the government didn't like that. So they've ended it by changing the rules for public sector companies, so it's not up to the GP locum anymore, but down to the employer i.e. the GP practice, or similar employer, to determine if IR35 applies.

Perhaps that's fair enough. But the tool that employers are given to help them decide whether the locum is really, truly self-employed, or is in fact an employee, doesn't exactly cut the mustard, leaving the practice instead having to make that decision based on 'least risk': "Will we, as a practice, be at more risk treating this GP as self-employed or as an employee?". No prizes for guessing - it'll be the practice that pays, so 'employee' it is. Ouch.

Hold on, but I don't even have a limited company?

Now here's the rub. You don't need to have your own limited company for IR35 to apply, just an intermediary between you and the practice, or an employer who decides, for whatever reason, that you’re an employee.

IR35 does not apply to sole traders i.e. regular self-employed GP locums, but the focus on employment status has caused practices to take another look at their locums to ensure that they could not be held to be employees should HMRC enquire.

But it's not all bad

Since you can't insist that your self-employed, as it's not up to you (and actually never has been), there are a few other things you can apply to reduce your risk and, if all else fails, IR35 could actually work in your favour.

Clarify your T&Cs

Employment law expert Ray Levy is behind NASGP LocumDeck's Terms & Conditions generator, which includes three well-defined clauses that reduce the risk to both you and anyone that engages you for locum work against you being an employee. We suggest you point this out to practices, and the best way to do this is to use LocumDeck to manage your locum work.

Exert your status as an employee or a 'worker'

If the practice still insists on paying you as an employee, then an awful lot of what's in a typical GP locum contract to protect you from employment status doesn't apply, so you may as well replace it with terms and conditions that protect your newly-acquired employee status, such as sick pay, maternity leave, holiday entitlement, redundancy, unfair dismissal etc. i.e. a salaried GP contract. Or if not an employee, there is a another legally defined form of employment whereby you're classified as a 'worker', which still entitles you to paid holiday!

Note that a decision to apply IR35 does not in itself actually make you an employee, it just says that your company must pay you a deemed salary, from which normal PAYE is deducted – and the practice makes these deductions, and only pays your company the net amount.

At the end of the day, it's ultimately up to you on what terms and conditions you accept to work for a practice, so you're in a good position as a de facto self-employed GP locum to insist on this.

Post-hoc employee status

You've always worked at the same practices as a freelance self-employed GP locum, but now all of a sudden they say you're an employee? And nothing's changed? It may therefore have escaped them that HMRC may want to know why too, and come after them for any unpaid NI and income tax. And also that you are now possibly entitled to 'worker' or even employment rights going back potentially years. Maybe they want to take a much clearer look at how they're defining you under IR35 or employment status?

Getting the best advice

IR35 is big. Bringing in various factors, IR35 could actually be a blessing in disguise (paid holiday anyone? So you should have received sick pay for those three months off two years ago?). Bearing in mind the huge long-term impact this could have, and that no GP locum is the same, we recommend you get bespoke advice.

From your trade union

Either the Medical Practitioners Union or BMA should be able to give you straightforward advice, but in the latter case do make sure that they're not currently handling any disputes with the practice concerned, as this could have an impact on how they handle your case.

From an accountant

Always a good idea. Take a look at our range of articles from medical accountancy expert Liz Densley, or of course speak to your own accountant.

Form a legal expert

Speak to someone like Ray Levy, or use a service like Lexoo to find a legal expert, to see if there's anything they can do to help.

See also

Crash course in IR35 ‘intermediaries legislation’

Richard has worked as a freelance GP locum since 1995 in around 100 different practices, living and working in West Sussex and Hampshire. He founded NASGP in ‘1997 and the UK’s first locum chambers in 2004, and leaving the chambers in 2017.

He enjoys walking, reads too many books on behavioural economics and has an unhealthy obsession with his sourdough starter.

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