NHS 'exploiting tax fears to make PSCs accept blanket IR35 decisions'

An alert that a one-two punch of legislation  -- a reformed IR35 followed up by the corporate criminal offence -- could hit the contractor sector is being exploited by NHS trusts.

In fact, since the alert that exposure to the off-payroll rules could lead to exposure to the anti-evasion rule, trusts are using the fear-factor to make PSCs accept blanket, inside IR35 determinations.

The trusts claim an ‘outside’ determination found to be wrong by HMRC could lead to tax officials trying to apply the facilitation of tax evasion offence too, so better the PSC be ‘inside’ instead.

“The situation [of unfair blanket IR35 rulings] is being maintained by threats of reprisals for all involved, under the Criminal Finance Act 2017,” locum doctors' group IHPA told ContractorUK.

“[To help convince them not to] break ranks with the blanket position…[there is both] the threat of personal liability and [that of] ‘reputational damage’ for the trusts” .

An NHS England contractor yesterday confirmed that the “threat of HMRC investigation” was contained in her NHS client's ‘advice’ to her and her fellow contractors to operate inside IR35.

She said that on top of the threat of HMRC reprisals, PSCs have been given “no option” by the trust other than to accept the ‘inside’ IR35 ruling, described as its contractors’ “default” status.

Dr Iain-Campbell, IHPA’s general secretary, believes that threatening tax repercussions is, like the blanketing, at odds with the ‘reasonable care’ that engagers should take when assessing IR35 status.

And that threat may be baseless. “The Criminal Finance Act is, in reality, no impediment to a lawful assessment” he said. “Its misuse to intimidate in this way is all smoke and mirrors.”

Editor's Note: Related --

NHS probe reveals 'damaging unintended consequences'

NHS 'needs IR35 enquiry on patient care impact'

NHS in IR35 status U-turn

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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