Locum pharmacists - employment status reminder

Medical practices will be familiar with the obligation to assess the employment status of locums when engaging them and the need to document their decision under the off-payroll/IR35 rules. While these obligations have now been in place for some time, HMRC’s guidance on the issues continues to evolve.

With effect from 30 June 2023, HMRC withdrew its previous guidance on assessing the employment status of locum pharmacists. The old guidance made reference to the “standardised form of agreement devised by the National Pharmaceutical Association (NPA) which is commonly utilised for the engagement of locum pharmacists”. The updated manual simply directs users to the generic guidance for “Agency and temporary workers”.

While the withdrawal of this specific guidance does not mean that the rules on when a pharmacist must be treated as a deemed employee (and PAYE deducted and paid by the engaging business) have changed, HMRC says that the guidance has been withdrawn because it wants medical practices and dispensing businesses to use its CEST tool and that specific sectoral/role related guidance in its manuals is no longer necessary.  Essentially this brings the engagement of locum pharmacists in line with other off-payroll workers in that an assessment of employment status, whether by CEST or other form of analysis, is required to determined whether employment for tax would be deemed and to demonstrate having robust engagement procedures.

Indeed, even the original guidance made clear that if the locum pharmacist carries out work not confined to dispensing medicines and advising the public, the individual may be a deemed employee of the engaging party. However, it did give a fairly strong steer that where the standard NPA contract was used and observed to the letter, the locum pharmacist was likely to be self-employed.

The likely risk here from HMRC’s perspective, is that some businesses might believe that just having an NPA contract in place for their locums is good enough – when HMRC would expect engagers to do a much more thorough assessment of what the pharmacist actually does in reality, rather than simply rely on what the contract says.

This a timely reminder that all practices engaging locums must consider the specific circumstances of each contract (particularly repeat locum contracts) and check whether the worker’s activities indicate that they have exercised (or could exercise) any ‘right’ to supervise, direct or control the individual’s work. 

The example that was withdrawn from the manual may have referred to an NPA standard locum contract, but it also included the counter indicator of a locum “brought in to assist the proprietor/chief pharmacist to dispense prescriptions”. Where this occurred and the individual “had also been told [they] might also be required to work alongside the sales staff in the shop serving customers, stocking shelves, and ordering stock as instructed”, HMRC pointed out that these practical circumstances would trump any more tightly defined contractual obligations on the locum when assessing their employment tax status.

Medical practices and pharmacies have faced substantial recruitment difficulties in recent years and the use of locums continues to be widespread. However, practice managers should be vigilant and look out for any signs that a regular locum is gradually taking a wider role in the practice than originally intended: when staffing is short, covering gaps result in responsibility/control creep for a locum bringing their tax status into question. If HMRC visited your practice today, could officers easily tell locums from permanent staff?

For help and advice on any off-payroll/IR35 or other employment tax issue, please do get in touch with our team.

Contact

Juliette Smith, Midlands Director/Private Client Services
E: Juliette.Smith@bdo.co.uk
DDI: +44(0)121 265 7209
Mobile: +44(0)7807 021 030

Aimee Winterbone
Director; Medical/Business Services & Outsourcing
E: aimee.winterbone@bdo.co.uk
DDI: +44(0)1473 320803
Mobile: +44(0)7553 201456