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Locum Hospital Doctor and IR35

Locum Hospital Doctor and IR35

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Hi,

I am a junior doctor about to start working as an A&E locum from August through a limited company. I would like some advice on whether or not I am am likely to be inside or outside of IR35 regulations.

I am getting work via 3 different agencies and plan to pick up ad hoc shifts in various hospitals in my region. For example, I might do a week in A&E in one hospital through one agency, then another 2 weeks through another agency, a day here a day there, etc. Rates are set hourly but are often negotiable and as far as I'm aware there is no notice period to be served. I will not be entitled to annual leave/sick pay/pension contributions.

It would be obviously financially beneficial if this arrangement fell outside of the IR35 regulations but I can't find any clear advice on the matter. Can anyone help?

Out of interest, how would this compare to if I picked up say a 6 month contract in one A&E with a set hourly rate but again no entitlement to sick pay or pension?

Let me know if anymore information is required? I'm really keen to get some expert opinion on this.

Thanks in advance,

Matt

Replies (33)

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By Kate Cottrell
10th Jul 2015 17:06

Locum Hospital Doctor and IR35

 

Hello Matt

If you are working in an NHS Hospital below the grade of Consultant you are considered to be in a training grade, as the Consultant has the right to control the manner in which you carry out the services and the right to intervene at any time.  Consequently IR35 applies to this engagement.  For interest a Consultant doing the same at an NHS hospital through a limited company is also caught by the rules as he/she is acting as an Office Holder so effectively IR35 also applies.

It does not matter how many agencies are involved as IR35 concerns the reality of your relationship with the end client - the NHS hospital.

As regards your second point it is not clear if you will be on the hospital payroll or why there would be no entitlement to sick or holiday pay.

Hope this helps.

Kate Cottrell

Bauer & Cottrell

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By Matt89
10th Jul 2015 17:30

Thanks for the quick reply.

I didn't think it was as clear cut as that...does the fact that I'm working in different hospitals on an ad hoc basis without any regular employee "perks" not count against that? I thought other factors were taken into consideration?

Thanks

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By cfield
13th Jul 2015 11:10

Silver bullets but rare as dragons teeth

Control is a strong pointer towards IR35 but there other other "silver bullets" that would take you outside the intermediaries legislation. The only trouble is they're very hard to prove.

The most well-known one is a substitution clause and most agencies put these in their contracts now, but it needs to be unfettered in the sense that the client must accept any suitably qualified person you put forward to act in your stead. In practice, not many would.

You can also claim an absence of MOO (mutuality of obligations) but you have to be careful with this as you need to prove there is more than just the right not to offer/accept future work. It must exist on a day-to-day basis too, such as a right by the client to send you home without pay if their systems are down or to terminate the contract whenever they want.

I must confess, I didn't know hospital consultants were office holders (I thought this was just the likes of Ed Lester) but would bow to Kate's knowledge and experience on this as she does IR35 day-in day-out and is a renowned expert.

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By Kate Cottrell
13th Jul 2015 11:17

Locum Hospital Doctor and IR35

 

Employee "perks" are paid by the employer so if you have your own limited company then your company is effectively your employer, which means your company foots the bill for these.

Having lots of ad hoc jobs in different hospitals does not help you.  As before you need to consider IR35 for each job.  You will be working as a temporary agency worker and the nature of such work is to move around to various engagers.  Having your own limited company does not change this.

I note you plan to do this from August, so perhaps you have not yet set up the company, in which case you may want to reconsider in light of all the announcements in the budget last week.

The budget announcements include a dividend tax, a tightening up of IR35 and the fact that it will be unlikely that you will be able to claim tax relief on your travel and subsistence costs.  All these thing will bite from April 2016.

Hope this helps.

Kate Cottrell   

  

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Morph
By kevinringer
13th Jul 2015 13:29

Working at GP surguries

Would the situation be different if the locum was working for a number of GP surgeries, again through a limited company? 

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By cfield
13th Jul 2015 13:37

Multiple clients

As already mentioned, IR35 is on a contract-by-contract basis so you would have to assess each one on its own merits. Having said that, it is usually a strong pointer against IR35 in borderline cases if you operate as a bona fide business with many different clients, especially if you do so simultaneously.

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By Matt89
13th Jul 2015 13:57

Thanks again for all the input.

So I accept that there is a lack of control but, as cfield has said, can it not be argued that an absence of MOO and substitution clause (bearing in mind the caveats mentioned) point towards being outside of ir35?

Kate, I understand what you say about the company footing the bill for annual leave/sickness etc, but if the client doesn't provide these in the contract like they do for their regular employees, does this not still suggest outside ir35?

Also, I understand that ir35 is considered on a contract by contract basis, but as cfield has also said, would working with multiple clients at the same time also not work in favour of operating as a self-employed business and therefore outside of ir35? This point seems to conflict with what Kate has said.

Sorry to press with all the questions. I really appreciate you taking the time to reply. I have some accountants I have spoken with say I would be outside, some say I would be inside. I don't know what to think anymore!

Thanks again.

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By cfield
13th Jul 2015 14:19

Multiple clients only relevant in borderline cases

Matt89 wrote:
I have some accountants I have spoken with say I would be outside, some say I would be inside. I don't know what to think anymore! Thanks again.

Which is exactly why IR35 is such a bad tax. It is a huge grey area, it hangs over everyone like a Sword of Damocles, and it rakes in peanuts with little deterrent effect at the end of the day. The big fear (or so they say) is that millions of employees will flock to become companies. Well if they'd restricted it to the Friday to Mondays at the start, which is what it was originally supposed to be aimed at, they wouldn't have to worry about that. Goodness knows what this "toughening up" is going to entail. I dread to think. No doubt they will drag in many companies that are real businesses, just as they seem to be about to do with travel expenses.

Anyway, I did say having multiple clients would only be a factor in borderline cases. Also, having multiple clients is not necessarily the same as running a "proper" business, so it may not earn you any "brownie points" at all.

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By Johnwilliams22
13th Jul 2015 14:26

One client
Surely there is only one real end client the NHS.

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By vstrad
13th Jul 2015 16:17

Are you in the wrong job?

Dear Matt,

Are you sure you're in the right job? You seem more cut out for a role with the EU Commission - you know, those people who keep making countries have repeat referenda until they come up with the answer they want.

I expect you get exasperated sometimes with patients who have Googled their symptoms and are not prepared to accept that "Doctor knows best". Now imagine how Kate (one of the UK's leading IR35 experts) feels, having given you the benefit of her knowledge and experience free of charge, to have you arguing the toss.

You've had the equivalent of a Harley Street consultation for nothing. Take the hint!

 

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Morph
By kevinringer
13th Jul 2015 16:36

Bit harsh

vstrad wrote:

You've had the equivalent of a Harley Street consultation for nothing. Take the hint!

He's asked a valid question and not being an accountant isn't going to know who the respondents are.

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Replying to vstrad:
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By venudr2001
10th Jul 2018 12:31

I totally agree with your point that Kate service should not be free. Can I have a list of IR35 victims you currently know we will all contribute to a collective fund and we can together for discussion. Of course if Kate were to take up our cases we pay her professional charges independently. Does this sound fair?

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By chatman
13th Jul 2015 16:36

I always make my GP justify his/her diagnosis. Mind you, he/she does get paid for it.

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By Matt89
13th Jul 2015 16:50

Point taken. Apologies if I came across as argumentative, I was just trying to generate a discussion on such a hazy subject - it's something we practice in medicine! I do appreciate all the advice kindly offered.

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By chatman
13th Jul 2015 16:58

Doctor's willing to justify their advice?

Matt89 wrote:
it's something we practice in medicine!

Not in my experience; not without a lot of persuasion anyway.

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By Dr Dave
13th Jul 2015 17:57

IR35

Matt89 wrote:
Point taken. Apologies if I came across as argumentative, I was just trying to generate a discussion on such a hazy subject - it's something we practice in medicine! I do appreciate all the advice kindly offered.

I think that some of the comments thrown back at you from the profession were harsh and certainly not what I would expect from any profession.

Please contact me if you would like to explore some possibilities [email protected]

 

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By [email protected]
13th Jul 2015 19:43

IR35 Status

Hi Matt

Are you being guaranteed certain number of hours which you have to fulfill?

Do you have the ability to terminate the contract at any time or does NHS have the ability to terminate the contract at any time?

 

it will be very hard to prove lack of control or personal service with NHS Contracts with Junior level position but there are plenty of cases around mutuality and its becoming quite important one these days.

Recent case of Stringfellows restaurant Ltd or another case of MBF design services Ltd both cases there was control and personal service element were there but were mainly won on the basis of mutuality of obligation.

 

As long as you can have a clause in the contract where NHS have the right to terminate your contract without giving notice than there is no obligation within the contract and you should be ok. Remember this should reflect the reality and not just for showing HMRC.

 

I hope this helps

Sumit

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Portia profile image
By Portia Nina Levin
14th Jul 2015 11:03

Really?

Stringfellows Restaurant!

A MOO based argument will not work where a worker is being placed by an agency for a period of time, whether that period of time is a week or just an hour. Each placement will be regarded as a separate engagement, where MOO will be present.

Negotiate contract rates bearing in mind that you will have to pay NIC on up to 95% of the income.

Do not bother spending money with the idiots that say that IR35 will not apply. There will be control, and there will be MOO. A requirement for personal service also seems inevitable.

The first response seemed perfectly adequate to my mind.

@ Kevin I think ESM4061 and ESM4062 answer your question.

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By [email protected]
14th Jul 2015 15:15

Hi Kevin Seems like you have to review all the case law and in fact go in detail to figure this out that each agency based contract will have MOO and Control automatic and personal service requirement will be there. So based on your logic every agency based contract will be within IR35. So why all this fuss? I am not sure where this has come from. Each engagement is separate and please go through various case laws and I can name at least 20 agency based cases where HMRC have lost.

 

Thanks

Sumit

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Morph
By kevinringer
15th Jul 2015 09:25

Thanks Portia

Portia Nina Levin wrote:

@ Kevin I think ESM4061 and ESM4062 answer your question.

Portia, once again you've come up trumps. Thanks.

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By AlexLondon
15th Jul 2015 11:11

ESM

Portia Nina Levin wrote:

@ Kevin I think ESM4061 and ESM4062 answer your question.

This seems very clear -  I know that manuals give HMRC's view and are not the legislation but given this why the apparent uncertainty (to some respondents) as to whether or not IR35 would apply?   

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By cfield
15th Jul 2015 11:58

SDC rules and employment status are different and separate

AlexLondon wrote:

This seems very clear -  I know that manuals give HMRC's view and are not the legislation but given this why the apparent uncertainty (to some respondents) as to whether or not IR35 would apply?   

Because ESM4061 refers only to the agency legislation where SDC is the single relevant factor. These rules don't generally apply to personal service companies. Agencies are still allowed to pay them gross.

Where a company is involved you have to consider IR35 instead. The hypothetical contract considers employment status as established by the courts, not just control (although SDC and control are pretty much the same thing as you can't control the work if you are being supervised or directed). Employment status depends on many other factors as well as control. MOO and personal service are the main ones. For a junior hospital doctor, however, they are unlikely to be in point so, as Kate has explained, IR35 almost certainly bites.

EMS4062 refers to locums generally, so applies to non-agency locums too. It says employment status is usually present for GP assistants but not stand-ins and that it is essential to review status in the normal way. Hence, they accept that there is some leeway here. If employment status applies, however, the hirer must operate PAYE unless the contract is with a company, in which case the director must comply with IR35.

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By Kate Cottrell
14th Jul 2015 12:13

IR35 and NHS Hospital Doctors

 

This is not a "grey" case or indeed a "borderline" one in my opinion.  This is a training grade so there is the right of control and IR35 applies. 

The only point I would add here is regards working in a GP surgery.  This is different and providing the individual is replacing the GP, rather than working alongside the GP then it is possible to show that IR35 does not apply but all subject to the written contracts and of course the reality of the working practices.

 

Kate Cottrell  

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By stt
15th Jul 2015 11:26

VAT?

I've just posted a separate question for a speech therapist operating via a limited company as to whether the supplies are VATable, and Matt should also consider this, in case he believes his supplies are exempt from VAT.

As he is under the 'direction' of the end client, his company seems to be making a supply of staff, which is VATable.

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Portia profile image
By Portia Nina Levin
15th Jul 2015 12:22

Indeed

stt wrote:

I've just posted a separate question for a speech therapist operating via a limited company as to whether the supplies are VATable, and Matt should also consider this, in case he believes his supplies are exempt from VAT.

As he is under the 'direction' of the end client, his company seems to be making a supply of staff, which is VATable.

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Portia profile image
By Portia Nina Levin
15th Jul 2015 12:22

You are talking complete Jane Horrocks

Whilst ESM4061 only expressly refers to agencies, it tells us HMRC's view on when a locum is not under the end client's control to a sufficent degree to make the end client a master and the locum a servant.

Where such control does not exist, there cannot be a contract of service, because the irreducible minimum for such a contract is not present. Accordingly IR35 cannot apply.

As I made clear though ESM4061 and ESM4062 are only of use in relation to the question that Kevin asked. The OP's question having been adequately answered in the first response before all the other "experts" turned up.

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By cfield
15th Jul 2015 14:02

Experts?

Portia Nina Levin wrote:

The OP's question having been adequately answered in the first response before all the other "experts" turned up.

I hope you're including yourself in that statement!

The reason why other "experts" chipped in is because Matt still had a query after the first response and it was necessary to explain why the fact he works at other hospitals is irrelevant. And also, that the other "magic bullets" against IR35 are usually less real than imagined.

As for Jane Horrocks, I'm not quite sure what you're disagreeing with in my last post. As far as I can see, we seem to be humming the same tune. Perhaps you just felt the need to do a bit of trolling. After all, that seems to be your stock in trade!

 

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By myke
29th Apr 2017 20:20

Please, could any one confirm the rumour that Locum Doctors have been exempted from IR35

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Replying to myke:
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By venudr2001
10th Jul 2018 12:34

This is not a rumour. As experts have agreed this is a very grey area. Obviously anyone will fight to defend themselves.

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By venudr2001
10th Jul 2018 12:32

By the way my name is Venu, ED registrar in NHS another victim of IR35. I would like to join this chat.

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Portia profile image
By Portia Nina Levin
11th Jul 2018 12:48

How the frig do I unsubscribe from this 5h1t?

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Replying to Portia Nina Levin:
By cfield
11th Jul 2018 13:03

How about cancelling your account?

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By L Haldane
11th Jul 2018 15:28

I agree with Cfield.

There are many who would welcome Portia cancelling her account and taking her foul language with her.

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