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View Full Version : NHS Reaches 'Agreement' that IR35 Changes 'aren't retrospective'



NHS1979
20th April 2017, 12:20
Health Service Journal reporting that top bods at NHS Improvement et al have been 'reassuring locums and temporary staff' that they've confirmed with HMRC no risk of retrospective...

"IR35 tax rules will not be applied to locums retrospectively
20 APRIL, 2017 BY SHAUN LINTERN

HMRC and NHS Improvement say there will be no retrospective action following IR35 tax changes
Locums say they are being taxed without receiving employment rights
NHS Improvement asks trusts to complete operational pressure situation reports
Locum doctors and temporary NHS staff hit by new tax rules will not face retrospective action over their previous tax arrangements, HM Revenue and Customs has confirmed.

NHS Improvement said it would work with trusts to reassure staff who are concerned they could be affected by tax investigations after IR35 regulations came into force this month. The new rules mean the responsibility for paying national insurance and income tax for temporary staff has shifted to the trust. For some locums who organised their tax affairs to limit their liabilities this has meant a significant reduction in their income.

The regulations apply to any temporary staff being paid through a personal service company and could reduce income for temporary staff by more than 20 per cent.

Hospitals have been affected by locum doctors and other staff refusing to show up for shifts as a result. In some trusts, such as Blackpool Teaching Hospitals and University Hospitals of North Midlands, around a dozen medics refused to work under the new rules.

Lincoln County Hospital had to turn to neighbouring trusts after its emergency department was said to be “just hours from closure” when locums refused to work.

An HMRC spokesman said: “The off-payroll reforms took effect on 6 April 2017, and apply to payments made on or after that date.”

An NHSI spokeswoman added: “We understand from the HMRC that the IR35 reforms concerning off-payroll are not designed to be retrospective in their application. This is a helpful and important clarification for NHS agency staff.”

HMRC said an individual earning £100,000 would normally pay £34,000 in tax but through a personal service company could reduce this to £13,000. For someone earning £50,000 they could pay as little as £2,000 in tax.

HSJ has seen emails from some locums demanding more than 50 per cent increases in their pay. HSJ has not identified any trusts that have agreed to demands to pay more.

A number of trusts have said their relationships with locums have ended after they sought higher pay but were refused. Sandwell and West Birmingham Trust told HSJ it had turned down a request for more money from a locum who then left the trust.

Diane Wake, chief executive of the Dudley Group Foundation Trust, said there had been “a small number of gaps” in rotas that were planned. “In order to mitigate the risks we have worked with individuals to either bring them on to our own staff bank, a temporary fixed term contract or substantive posts,” she added.

However, some locum staff told HSJ the NHS was wrong in applying a blanket approach to all locums and they were being forced to pay similar levels of tax to permanent staff without similar benefits and employment rights.

A speech therapist locum said she planned to return to Australia after doing the job for seven years in the UK.

She said: “I work hard as a locum and fill positions local staff don’t want. I often work twice as hard as permanent staff. I get paid less than third of what locum doctors get and I am unable to negotiate higher rates to account for decisions around IR35. This leaves the job financially untenable given the high cost of expenses and maintaining my professional status as a speech therapist.

“Needless to say, my house is on the market and I will return to my native Australia as soon as feasible.”

NHSI has been asking trusts to file situation reports linked to the IR35 regulations, including whether providers have concerns about safety and the ability to fill shifts.

A spokeswoman said: “We are offering trusts support and advice if they’re facing challenges with locums increasing rates to counteract the tax rule changes – a practice we have said is unfair and unacceptable.

“We’re helping trusts with securing support for shifts from elsewhere in the local area, as well as supporting shared banks, workforce planning, and increasing the use of e-rostering. Some locums and agencies are working with us and medical directors to make sure the locum market works well for staff and patients, tackling the culture that’s behind locums charging high rates. Our priority is to ensure services for patients continue as normal and we will review what support is needed on an ongoing basis.”

Interesting

northernladuk
20th April 2017, 12:27
I am sure the right people have been contacted about the assurances but it doesn't look right to me. There seems to be much discussion and agreement that certain locums working in hospitals should be inside. If they've decided not to follow that advice, stay outside and are now being pushed inside I don't see why they shouldn't be investigated as any normal contract would. It's a grey area for us in IT so harder to chase but when you part of a group that has been identified as inside already but claiming outside you can't assume any assurances are going to be watertight.

Seahorse17
20th April 2017, 12:54
"Not designed to be retrospective in their application" , is a bit different from an assurance that your previous engagement won't be challenged.

WordIsBond
20th April 2017, 13:58
HMRC said an individual earning £100,000 would normally pay £34,000 in tax but through a personal service company could reduce this to £13,000. For someone earning £50,000 they could pay as little as £2,000 in tax.
87% take home on £100K? Impressive. 96% on £50K?

Maybe you could get close to that if you pop £40K into your pension. And if a person on £100K as an employee who salary-sacrifices £40K into a pension isn't paying £34K.

This is the kind of stuff that convinces people that HMRC are not interested in fairness. This is totally dishonest of them.

When your tax authority engages in lying propaganda rather than just actually helping people calculate their taxes accurately, they need a complete house-cleaning.

TheFaQQer
20th April 2017, 14:02
"Not designed to be retrospective in their application" , is a bit different from an assurance that your previous engagement won't be challenged.

Absolutely agree. HMRC have been very explicit in the past that they would not rule out retrospection, and they haven't said anything here that means that it won't be retrospective.

A line from NHSI that they have heard from someone at HMRC that this isn't how it's designed is worth the paper it's written on.

LoughriggFell
20th April 2017, 15:45
"HSJ has not identified any trusts that have agreed to demands to pay more."

There was an article in The Guardian over the bank holiday, that identified a few trusts. It was titled " Desperate hospitals beg doctors to take on extra shifts at £95 an hour"

jamesbrown
20th April 2017, 15:49
:rollin:

It'd be an absolute first for HMRC to make any "agreement" w/r to future tax investigations, other than "they could happen".

Read: it's bollocks.

swamp
20th April 2017, 20:34
Apparently it would be unlawful of HMRC to offer any assurance against retrospective IR35 investigations.

b r
21st April 2017, 07:32
HMRC said an individual earning £100,000 would normally pay £34,000 in tax but through a personal service company could reduce this to £13,000. For someone earning £50,000 they could pay as little as £2,000 in tax.

Ok, that is 'tax' but what about all the other costs that aren't called 'tax' that still need to be paid out of the monies - typical lazy statement...

And quite frankly, would you pay attention to anyone other than HMRC - WTF has a client to do with how HMRC will react.

Finance
21st April 2017, 08:11
87% take home on £100K? Impressive. 96% on £50K?

Maybe you could get close to that if you pop £40K into your pension. And if a person on £100K as an employee who salary-sacrifices £40K into a pension isn't paying £34K.

This is the kind of stuff that convinces people that HMRC are not interested in fairness. This is totally dishonest of them.

When your tax authority engages in lying propaganda rather than just actually helping people calculate their taxes accurately, they need a complete house-cleaning.

Its a rubbish number and propaganda worthy or Goebbels.
Does not include the corporation tax you would pay. Though for that matter they also miss out the ni on the permanent salary.

DotasScandal
21st April 2017, 09:20
Its a rubbish number and propaganda worthy of Goebbels.


Meet HMRC's very own little Goebbelses.... I wonder how many millions of public money have been funnelled into this psychological warfare outfit?
https://www.dotas-scandal.org/behavioural-insights-ltd-at-it-again/
"Helping people make better choices for themselves", no less.

Finance
21st April 2017, 10:20
Meet HMRC's very own little Goebbelses.... I wonder how many millions of public money have been funnelled into this psychological warfare outfit?
https://www.dotas-scandal.org/behavioural-insights-ltd-at-it-again/
"Helping people make better choices for themselves", no less.

There was a steady stream of anti contractor articles in the media in the run up to the introduction of the new IR 35 rules. Presumably influenced by HMRC?

sal
21st April 2017, 11:34
An NHSI spokeswoman added: “We understand from the HMRC that the IR35 reforms concerning off-payroll are not designed to be retrospective in their application. This is a helpful and important clarification for NHS agency staff.”

Meaning that the old rules apply and it's the PSC that is liable for the back taxes if an investigation proves that the prior engagement was inside IR35, not the client/agency.

Not that there will be no investigations into prior engagements.

All in all seems legit.

northernladyuk
21st April 2017, 13:56
87% take home on £100K? Impressive. 96% on £50K?

Maybe you could get close to that if you pop £40K into your pension. And if a person on £100K as an employee who salary-sacrifices £40K into a pension isn't paying £34K.

This is the kind of stuff that convinces people that HMRC are not interested in fairness. This is totally dishonest of them.

When your tax authority engages in lying propaganda rather than just actually helping people calculate their taxes accurately, they need a complete house-cleaning.

They are conveniently ignoring CT, because that isn't the person paying tax, is it?

WordIsBond
21st April 2017, 20:04
They are conveniently ignoring CT, because that isn't the person paying tax, is it?
Of course they are.

If they counted CT on £90K profit, so that the contractor pays £31K (compared to the employee paying £34K), it just wouldn't look so impressive, would it?

As noted, the employee number doesn't count the ERNI, but they don't want to count that because they don't want the masses to twig to just how much tax is being paid on their earnings that could potentially be take home for them.