Is the issue that the NHS don't want ot be responsible for deducting the PAYE themselves and as such want an agency or umbrella to do it for them?
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If person/entity is deemed to be inside IR35, the responsibility of operating PAYE falls on to the Intermediary (i.e. recruitment agency). In the contractual chain, whoever is engaging directly with PSC, will have to opearate PAYE.
So: Self-employed/PSC > Recrtuiment Agency > NHS
Recruitment agency will be responsible of running an IR35 test, to establish if subcontractor is inside or outside IR35.
If the person would be enganging NHS directly (which is not very common), NHS would operate PAYE, but only if individual is inside IR35