FCSA clarifies their position on Umbrella companies undertaking their own IR35 assessments

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24 November 2017

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Freelancer & Contractor Services Association clarifies the position of umbrellas undertaking their own IR35 assessment – and it’s a huge win for justice.

The Independent Health Professionals’ Association (IHPA) was delighted to receive confirmation that the Freelancer & Contractor Services Association (FCSA) recognises the right of the ‘Fee Payer’ (e.g. the umbrella or agency where it pays the worker) to disagree with the Public Sector Client’s determination and undertake its own IR35 assessment with ’Reasonable Care’ in line with the law. .

Responding to public questions from the Independent Health Professionals Association (IHPA) on whether such an umbrella would be considered ‘FCSA Compliant’ FCSA CEO Julia Kermode confirmed the FCSA’s view, supported by legal advice from Earnest & Young, that the ‘Fee Payer’ could quite legitimately disagree with the public sector client where it believes the determination to be incorrect.  She has confirmed that such an umbrella could be considered ‘compliant’ by the FCSA – as it would be acting lawfully, although it may shoulder legal liability for its decision. Most such providers mitigate this risk through an insurance product that insulates them from this risk. It will be the “fee-payer”, acting on the advice of the client, who decides whether or not to account for tax on an employment basis, rather than the contractor’s intermediary.

While the fee-payer is the person who has to operate PAYE and so must take the decision whether or not a contractor falls within the new regime, they are expected to take that decision on the basis of information supplied by the client (who of course may be the fee-payer). Section 61T ITEPA (Chapter 10 of Part 2 of ITEPA) requires the client to inform the person with whom they contract whether they have concluded that the worker is similar to an employee (as defined in the legislation) or dissimilar s 61T (1). That person can then ask the client for an explanation, which must be given to them within 31 days. If the client fails to do this, they are treated as the fee-payer. If the client contracts directly with a PSC, this means they are required to tell the PSC why they have decided they should or should not deduct PAYE. The worker has to provide the fee-payer with details of his relationship to the intermediary, so that the fee-payer can decide whether the worker falls within the requirements relating to companies, partnerships or individuals: s 61U.

Speaking in a public and open LinkedIn posting Julia Kermode stated:

Who is liable?

This depends upon whether the Public Sector Client (eg NHS trust) has honoured its statutory obligations. Particularly whether it has reached an individual determination, and whether Due Care has been taken in reaching it.  Where it does the above, the ‘Fee Payer’ (in this case the umbrella), would be liable for any unpaid taxes should it get the determination wrong (insurance is available to mitigate this risk).

What about where the public sector client behaves unlawfully, eg blanket assessments?

In this case the public sector client assumes the liability BUT the Fee Payer decides whether to operate IR35 or not.

Where the tax liability has passed to the public sector client under the new Chapter 10, for example, due to the client/NHS trust having failed in its statutory duty to undertake a lawful individual IR35 assessment with reasonable care i.e. blanketing, the umbrella may still make the determination; any tax liabilities will fall on the public sector client.

So, if the public sector body were acting lawfully, as FCSA CEO Julia Kermode correctly highlights above, the umbrella would be taking a risk in reaching its own determination. This is stark reminder why such umbrellas are often well advised to have insurance models in place to mitigate the tax risk here – which most do.

That said, where the public sector body is acting unlawfully, as it seems a truly staggering number of public sector bodies are, then the public sector client has made itself liable by acting in this way.

Misleading Rhetoric

This discussion highlights a recurring theme of misleading HMRC rhetoric surrounding who is liable under the public sector off payroll reforms, which given its patently counterfactual claims that there is no blanketing likely surprise nobody.

HMRC has been routinely attempting to give the false impression that there is an obligation upon other parties to respect the public sector client’s determination. A decision which IHPA’s leaked evidence and multiple industry sources reveal is usually unlawful in practice.

Who is the Fee Payer (The technical bit!):

Put simply, this means whoever pays the worker’s company, or where the payment chain moves offshore the last UK resident company/individual – in this example it refers to an umbrella company.

Or in legal speak (feel free to skip):

The “fee-payer”, who is the lowest UK-resident person, not controlled by the worker or their associates, and not being a company in which the worker or their associates has a material interest, who forms part of a chain of persons along which the consideration for the worker’s services is passed from the public authority client to the intermediary. Where the public authority engages the intermediary directly, they will be the fee-payer as well as the client.

These requirements are set out in new ITEPA Chapter 10 s 61N.

Does the Sector Client Have to Reach a Determination?

Whilst there is a statutory obligation upon the client to reach an individual determination with reasonable care, most are failing to do this, and are instead adopting blanket approaches as they lack the required legal background to comply, and are not competent to exercise the required reasonable care. Furthermore, most would struggle with the administrative burden of compliance with the legislation, and huge pressure from external bodies to blanket by the collusion of numerous other bodies. They’re also required to clarify enquiries into how their determination has been reached by the worker within 31 days. The public sector client’s determination does NOT need to be accepted by the fee payer. The fee payer needs to consider it, but may overturn it.

This demonstrates that the legislation is unworkable.

Who is the Public Sector Body Obliged to Tell Under the Legislation?

There is no statutory obligation on the client to tell anybody save the worker themselves. Not the agency, nor the umbrella.  There is equally no obligation upon anyone to abide by these determinations – most of which are unlawful blankets, and those which are not are usually being reached by those without the required technical knowledge to undertake an assessment.

The Fee Payer is responsible for whether or not to operate IR35. This will be the public sector body (eg NHS trust) only where they pay the worker directly. We must remonstrate that this is NOT the form of ‘Direct Engagement’ that we see in the NHS at present. 

So would an umbrella which undertakes its own IR35 assessment with due care and respects the law be compliant? FCSA CEO Julia Kermode seems to think it would be so, which agrees with numerous legal opinions seen by IHPA.

So does HMRC acknowledge this is the case?

Yes actually. They might not like it, they might try to misrepresent things in their guidance and rhetoric, but take a good look at Pg 22 of the Private sector IR35 consultation and look at what change HMRC wants enacted:

6.11, question 8:

 "Q8. What action should be taken in the case where the fee-payer hasn’t acted upon the client’s conclusion that the worker would have been regarded as an employee for income tax and NICs purposes if engaged directly? Should an obligation be placed upon the fee-payer to adopt the client’s conclusion and there be sanctions for failing to do so?"

So does HMRC know there is no obligation to respect the public sector client’s decision – yes it absolutely does, and  they hate it.

Is that surprising? Hardly, given the overwhelming evidence of HMRC malfeasance –

  • misleading advice
  • tools that don’t align with the case law
  • Using arguments which have publicly failed in court on multiple occasions as a ruse to maintain unlawful blankets.

Buried away elsewhere in HMRC’s guidance is this other telling phrase:

“8. Where a public authority, agency, or third party, “the fee payer” makes a payment to a worker’s intermediary on or after 6 April 2017, IT DECIDES IF THE RULES APPLY, and then deducts tax and primary NICs from the payment it makes, and pays employer NICs and is included for calculating the Apprenticeship Levy. The VAT exclusive amounts must be accounted for through Real Time Information (RTI), in in the same way as for an employee. The change does not affect employment rights available to the worker.”

And

“31. The off-payroll working in the public sector legislation in Chapter 10 imposes the same employment status test. THE PERSON PAYING THE INTERMEDIARY MUST LOOK AT THE ARRANGEMENTS UNDER WHICH THE WORKER PROVIDES THEIR SERVICES TO THE CLIENT. If applying the employment status tests to that engagement shows they would have been an employee of the client but for the existence of the intermediary, then the engagement is caught by the new rules.”

 

Can the frameworks sanction you for disagreeing?

The stories of frameworks being complicit in unlawful conspiracies to blanket workers are abound.  Indeed, certain parts of such claims appear to be corroborated by clauses contained in their framework agreements and notable in some of their payslip audit requirements.

IHPA has seen contractual clauses which attempt to bind people to override the law in respecting the public body decision - whether it was reached lawfully or not.  Requests for clarification on such points are met with deafening silence. The section of the law on whether the ‘Fee Payer’ should operate IR35 refers to the facts of the engagement, not the public sector body’s determination.

If the Fee Payer knows a public sector body decision has not been reached lawfully, it is not unreasonable for it to make a correct decision. If the decision was reached lawfully, but the fee payer believes it is incorrect, the Fee Payer is absolutely entitled to respect the result of its own determination, provided it is reached lawfully and in good faith.

Can the frameworks bind you to do otherwise? Operating the off payroll rules when you shouldn’t is unlawful; it would appear to IHPA that a framework contract clause which attempts to compel an individual to commit an act which would be unlawful is probably unenforceable as a matter of contract law.

One cannot very well sue one’s hitman for not carrying through on a contract killing.

The above notwithstanding we urge all parties to take their own legal advice on this matter. Which we expect will confirm this position.

 

Disclaimer – This is not legal advice. We urge all parties to seek independent legal tax advice from regulated legal tax practitioners.

NHS bosses implicated in an unlawful multi-million-pound tax dodge as thousands of zero-hours health workers face financial ruin

Copyright Skypixel | Dreamstime.com
Copyright Skypixel | Dreamstime.com

NHS bosses implicated in an unlawful multi-million-pound tax dodge as thousands of zero-hours health workers face financial ruin

Bosses and Financial Directors of NHS trusts up and down the country are being implicated in an unlawful multi-million-pound tax dodge that is costing taxpayers millions and leading to some zero-hours workers in the NHS facing financial ruin.

In depth research and expert legal analysis by the Independent Health Professionals Association (IHPA) has revealed that hundreds of NHS Trusts and accountants have been exploiting a VAT loophole that has allowed private ‘umbrella’ companies to pocket up to 50% of VAT avoided whilst at the same time leaving thousands of temporary workers facing huge tax bill hikes.

This ‘double whammy’ threatens to have disastrous implications for the NHS, not only in millions of pounds of tax that should have gone to the Chancellor and then spent on a cash-strapped NHS, but also because many of the frontline workers affected will leave their roles with others facing hardship, bankruptcy and breakdown as a result.

The schemes, which hinge on accountants claiming to be providing ‘healthcare’ to Trusts to exploit a VAT loophole, became illegal when senior civil servants started pushing NHS Trusts to blanket assess all public sector contractors en masse as ‘deemed employees’, regardless of their contracting conditions, stripping them unfairly of self-employed status. This rendered the schemes illegal overnight from 6th April 2017 – but usage has increased exponentially throughout the public sector, including in the NHS. Direct Engagement VAT dodges have been previously described by Dame Margret Hodge MP then chair of the Public Accounts Committee, as “outrageous” and Aggressive Tax Avoidance”.

These companies are not providing ‘healthcare’ but are providing staff, but whilst the private companies are cashing in, the temporary health workers themselves are facing exploitation and a lack of any benefits associated with employment, such as docking their pay to provide their own holidays, sick pay and employer’s pensions – or not providing them at all. The unaffordable tax demands lead to their being taxed at a rate higher than actual employees. As a result, trusts are not only dodging their VAT bills, they are also flaunting the law by unlawfully passing on the trusts’ employment taxes to the workers themselves – seeing ordinary workers wrongly charged Employer’s National Insurance Contributions and even the Apprenticeship Levy – all meaning an unfair and unlawful 14% hit to the income of ordinary health workers, who predominantly come from ethnic minority backgrounds.

The scandal also opens the possibility that NHS chiefs, direct engagement providers, agency staff, and even ordinary doctors and nurses could face criminal convictions under the Criminal Finance Act 2017 if they continue to facilitate the use of these schemes as being ‘knowingly concerned’ in such schemes presents a risk of prosecution.  Many NHS bosses who have potentially crossed the legal line, albeit with good intentions, could find themselves facing criminal prosecution as the schemes they were mis-sold do not work where agency workers are assessed as deemed employees. 300 NHS Providers are believed to be affected.

Now the Independent Health Professionals Association has issued solicitor’s letters to NHS England and NHS Improvement to highlight this scandal and to ask if an audit has been done into these schemes and also demand that they now issue guidance to health care workers so others are not put in this position. It has also written to HMRC calling for an urgent investigation into the use of the schemes and the involvement of NHS Trusts.

This emerging scandal has come to light at a time when there is a growing spotlight on unfair persecution of thousands of public and private sector workers by HMRC as a result of poorly drafted legislation around freelance and agency workers, contractors and locum and bank doctors and nurses, the Off-payroll (IR35) legislation and the 2019 Loan Charge. There is growing concern in Westminster about the catastrophic effect of these flawed measures on the public and private sector, which are allowing HMRC to target the workers and not the companies through whom they contracted or were booked.

Dr Iain Campbell, Secretary General of the Independent Health Professionals Association said:

Whilst we are sympathetic to the Trusts who are indeed desperately underfunded, it is rank hypocrisy for Trusts to force our workforce into false employment, without the obligatory assessments, aiming to cause doctors and nurses to be taxed more, whilst contemporaneously engaging in arcane accountancy practices in an attempt to dodge their own tax liabilities arising directly from the same actions. This would be bad enough on its own, but to then force workers to shoulder the Trusts’ employer’s liabilities beggars belief.

Many NHS bosses and accountants will not be resting easily as news breaks and we urge all affected to review their arrangements to ensure they are certain they are all behaving lawfully.

“The current unlawful behaviour here needs to stop, and that Trusts urgently need the extra money which the NHS needs and the Chancellor, who presides over these very tax schemes, is presently denying them.”

IHPA Head of Legal Stephen Mhiribidi added:

“Even working avoidance schemes of this nature are usually required to register with HMRC’s Declaration Of Tax Avoidance Schemes (DOTAS) regime to allow them to be investigated by the taxman, but we note direct engagement schemes have not been registered’:

ENDS

How the latest decisive IR35 tribunal victory affects the locum market

© Jo De Vulder | Dreamstime.com

The IHPA is delighted to note the decisive court victory of Jensal Software Ltd in his IR35 Tribunal against HMRC and, whilst there were a number of important factors one is, or rather should be, the final nail in the coffin of HMRC's highly criticised CEST tool.

A critical factor in this case was the test of Mutuality of Obligations (MOO).

 

What is mutuality of obligations?

In its simplest terms this means that the client is obliged to continue offering you work and you are obliged to continue accepting the work offered.

MOO is a key factor in IR35 (off-payroll rules) assessments, which comes up often in the case law, and yet is completely omitted in the CEST tool. In a webinar conducted between NHS Trusts, NHSI, and HMRC, Mark Frampton (HMRC's Policy Adviser on IR35) revealed a shocking fact to the contractor world - HMRC had deliberately omitted this key test from the CEST tool as they considered MOO to be present in all contractor engagements.

This position is at odds with all previous case law. Indeed, were this the case, why has this been such an enduring test in the case law? Surely the courts wouldn't spend so much time deliberating on this point.

This latest case put HMRC's flawed reasoning to the test and the courts have, unsurprisingly, thoroughly rejected it.

Jolyon Maugham, QC, Director of The Good Law Project predicts that in a two years MP's would be looking at the question "whether the BBC and the NHS were right to force everybody to be taxed as employees in circumstances where the case law has shown, after the fact, that very often that those people were properly taxed as self-employed.”

 

What does this mean for locum contractors?

This thoroughly underlines why the CEST tool is not fit for purpose and cannot be used. MOO must be taken into account by NHS Trusts in making IR35 determinations as we have highlighted in our guidance sent to all NHS Trusts in September 2017. The recent court judgement spectacularly demonstrates that HMRC has been misleading Trusts by attempting to steer them away from this important test.

The bottom line is this comes down to whether there is an obligation to provide work to the locum and correspondingly upon the locum to accept work offered.

Some questions to consider are:

  1. What is the minimum notice period I need to give the locum of termination?
    - eg in Many contracts in current use this is 4 hours. In Brookson's contract, for example, the notice period is only 1 hour.
  2. Can I unilaterally cancel the contract without repercussions?
    Medical staffing will have experience in cancelling locum contracts. They'll also know locums cannot sue them over it. They are entitled to usually only a few hours notice. Anything else is often a courtesy.
  3. Do locums cancel shifts themselves at short notice?
    Many in medical staff will find this is a frequent and frustrating experience for them. It does however underline the point.
  4. Are locums obliged to do the shifts I tell them to?
    You might wish they were but anyone that has every tried to push this matter will tell you a locum decides what shifts they will and will not work. Indeed their hours are often negotiated and they have the right to simply refuse to do shifts. They will often try to give adequate notice as a professional courtesy (and the law allows this without compromising MOO).
  5. Oh and if someone from medical staffing read some of those and thought - if they tried to do that I'd cancel their contract on the spot...
    You've just proved the point the fact you can do that tells you there's no mutuality of obligations.

The number of locums, in our estimation, who would have a significant degree of MOO is perishingly small and the omission of this test has been a very deliberate injustice on the part of HMRC to force contractors into blanket false employment.

That deliberate omission has now been rejected and it behoves NHS Trusts to consider MOO in their assessments.

It is extremely likely that this will change many of your IR35 status determinations. There are, of course, other tests but MOO is a big one!

Any Trusts who have realised HMRC's guidance is unreliable with this and would like assistance in helping them reach IR35 determinations for IHPA members please feel free to contact ir35help@ihpa.org.uk and we will be more than happy to guide and assist you.

RSVP – Agency Sector Crisis Summit, IHPA Legal Brief, and GDPR crash course

Legal Symposium and Crisis Summit

Thank you for your interest in attending the IHPA legal symposium and current events briefing from the IHPA’s legal team, and a Locum Industry Crisis Summit

Venue:
Black Suite, BMA House, Tavistock Square, Bloomsbury, London WC1H 9JP

Date and Time:
Friday 25 May 2018.

0900hrs for 0930hrs start till 1300hrs

Agenda
0900 - 0930hrs Registration
0930-0945 Welcome Address/IHPA story so far / Market analysis

Speaker Alex Peebles of Duncan Lewis Solicitors (profile)
0945 - 1045 GDPR. Its relation to framework and HMRC audits

1045 - 1115hrs Coffee break

Speaker Richard Clayton QC of 1 Bedford Row (profile)
1115 - 1215hrs Competition law in the health service, price fixing, monopsonies and cartels

No Fields Found.

On unlawful deductions of class 1 secondary NICs and apprenticeship levy

Of unlawful deduction's of Class 1 secondary NICs & apprenticeship levy, & lack of 'employment' rights for 'deemed employees' in the NHS (they really don't have any in some models);

IHPA IPSE meeting on NICs

So we had fruitful meetings with the chair of NHS Confederation, the Right Honourable Stephen Dorrell, IPSE, legal professionals and other stakeholders.

The message is beginning to filter through to the right people and through the appropriate channels- in a fair and measured manner. More to follow after other meetings going forward.

There is hope for contractors under #FalseEmployment and paying both their employee and employer taxes- watch this space people and get on board to sort out this mess and injustice.

All that is required is proper assessment by appropriately qualified professionals & for abusive models to stop!

NHS tax reforms- False employment contracts will lead to patient safety risk

Press Release

April 2018

Risk - lrg

NHS tax reforms: False employment contracts will lead to patient safety risk

Almost all (98%) of independent healthcare professionals would consider seeking work outside the NHS in response to a real-terms pay cut caused by blanket IR35 tax reforms, a survey has found.

The research by the Independent Health Professionals' Association (IHPA), questioned 537 independent healthcare staff on a range of issues affecting their working lives.

A further 70% said they would contemplate taking up positions with private UK healthcare providers. Half of independent healthcare workers would also consider working outside the EU if they were deemed to be within the restrictions of IR35, while a third (32%) would look for healthcare work in another EU country.

Those deemed inside the IR35 tax rules have seen incomes slashed by 30% - 50% due to being taxed as fully employed, despite not being entitled to rights such as maternity leave or sick pay. These staff are also required to personally cover required expenses such as long-distance travel and indemnity insurance, which can total thousands of pounds.

Ben Itsuokor, consultant geriatrician and president of the IHPA, said: “It’s highly troubling that certain NHS Trusts are pushing ahead with their unfair implementation of the IR35 rule, which leads to locums being falsely classed as inside IR35 due to blanket and incorrect, implementation of the IR35 rules, with them subsequently losing up to half their income.

“Distressingly, stories have now emerged revealing that vulnerable locums are being encouraged towards unsustainable, questionable tax arrangements which could leave them facing life-changing tax bills long-term. This, coupled with the ongoing NHS crisis, looks set to drive a backlash of locums leaving the service, and even the country, due to contract work becoming economically unviable, creating severe staff shortages.

Independent healthcare professionals were also questioned on what they feel is putting the biggest strain on care provision in the NHS, with staff shortages topping the list.

85% of independent healthcare professionals warn that ongoing staff shortages will cause a decline in NHS patient safety. A further 64% of respondents believe that funding cuts are responsible, with 54% stating that management, internal bureaucracy and wastage is to blame. Over one in five (21%) believe that a decline in patient care standards is being driven by the number of patients using the service without genuine need.

“Clearly, there is the real and present danger that patient safety and care will be put at risk. Continuing to contract under false employment in this manner increases costs for Trusts and will lead to much bigger problems down the line.”

 

About the IHPA

The Independent Health Professionals’ Association (IHPA) is an unincorporated association with the mission of supporting locum doctors and other healthcare professionals to secure their rights by negotiation, mediation and litigation, as required. It does this by providing advice, assistance and a network for sharing relevant information and continued professional development. The IHPA aims to facilitate a collaborative culture, to bring together the shared objective of ensuring the delivery of first-class patient care.

IR(ME)R17 Referrer Update Training Course

medizin

5th February 2018 saw the implementation of the new Ionising Radiation (Medical Exposure) Regulations 2017 (IR(ME)R17). This updates previous IR(ME)R2000 and the 2006 and 2011 amendments.

A significant change if not observed by Referrers, could potentially lead to litigation.

X-Wray training will bring you up-to-date with required regulation to avoid this.

Date: Saturday 7th April 2018

Time: 9am-12pm

Format: Webinar

Cost

£70 for non-IHPA/LDU delegates

£50 for IHPA members

A verifiable CPD Certificate will be provided on completion of a delegate statement submitted to Clare. This certificate can be used as evidence of IR(ME)R update training for employers and CPD.

 

x-Wray training

Clare Wray has been a qualified, state registered Radiographer since 1995.  Clare has worked as a Radiographer in both the NHS and British Army. Clare has been a qualified Radiation Protection Supervisor since 2006

Clare will be donating her time and lecture for free. Profit (following deduction of PayPal and Webinar host expenses) will be donated to the IHPA fund (Employers’ NI, Apprenticeship Levy & Direct Engagement case fund)

Testimonials

I found the day to be highly relevant to my scope of practice , well structured and interesting, and most importantly I’ve been able to take away a lot of areas for development and improvement that we’ve already acted upon. For starters, we now have a repeats and retakes/ incident book, and I was noting down dose on patient record on Monday when I got back

As I think I mentioned on the day, the verbal feedback was really good and I will of course contact you again in a  few weeks with more formal feedback once we have received enough

Just wanted to say a huge thank you for the session with the therapists last week. I don’t yet have their evaluation forms but they gave very good feedback so as soon as I have the evaluations I will forward the information on to you

Tutor made what could be a dry subject interesting

I found this course excellent and would not hesitate to recommend it

Independent health workers and IR35 – So far

IR35, health workers and current state of things

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Prior to April 2017 independent healthcare ‘locum’ contractors from all healthcare disciplines were disparate groups with no centralised voice.  This absence of representation on the national stage has facilitated repeated attacks on their income and working conditions in recent years – allowing cartel behaviour of rate fixing between NHS bodies to be rolled out without effective opposition and setting the stage to convince politicians that, this group could be bullied and manipulated into accepting unlawful blanketing under off-payroll tax rules (IR35), regardless of the clear reality that, for many locums, they should be outside the legislation due to a lack of control, mutuality of obligations, and because of the financial risks they bear – which can amount to tens of thousands of pounds.

April 2017 and the change to the Intermediaries Legislation:

The events we are about to cover are the assault that was the last straw for contractors and was the crucible which caused locums to come together to forge first the Locum Doctors Union and ultimately to expand to embrace all disciplines of healthcare contractor under the Independent Health Professionals Association….

In April 2017 a very minor alteration was made to the part of the UK’s tax legislation governing working through intermediaries, commonly referred to as IR35 – essentially only two changes were made:

  1. The responsibility for undertaking assessments and liability for back taxes was switched to the Fee Payer (Note that sometimes this is the public body but the responsibility rests, in fact, with whoever makes the final payment to the contractor’s company and this may be an Agency, Umbrella or Payroll company).
  2. For those found to be under IR35 in the public sector, previous rules allowing a 5% expenses allowance were scrapped.

Notably the rules for determining status have not changed and if you were outside IR35 legally beforehand you still are now….or at least if you got a fair assessment you would be.

….So, why did everything change in April 2017 despite the fact that the legal change should not have changed the outcome of a single assessment?

Sadly, there has been a simultaneous push by public bodies such as HMRC and NHSI to ignore the law of the land and manipulate public bodies into finding contractors caught by the IR35 legislation. Initially this was implemented by blanket banning of contractors working outside IR35. This was very clearly unlawful, and our organisation successfully challenged through the Judicial Review process – NHSI conceded it had been acting unlawfully by advocating blanketing settling out of court and issuing this updated guidance.

This clear indicator has been deliberately ignored by the calculator – as has been confirmed directly by HMRC’s chief policy advisor on IR35 Mark Frampton in a secret webinar held with Trusts and NHSI to coordinate de facto clandestine blanketing

Most public bodies were not equipped to handle the assessments properly and HMRC’s answer to this has been a tool (initially called the ES tool now called CEST) which does not align with the case law. The tool appears to be rigged and ignores key tests – such as mutuality of obligation something most locums would pass and achieve an outside IR35 result as there is no requirement on them to accept shifts nor upon the hospital to offer them. Many members have examples of contracts being terminated during a shift or within several hours of the start date. This clear indicator has been deliberately ignored by the calculator – as has been confirmed directly by HMRC’s chief policy advisor on IR35 Mark Frampton in a secret webinar held with Trusts and NHSI to coordinate de facto clandestine blanketing – above board blanketing having failed.

Additionally, the courts have consistently ruled that ‘Mechanistic Approaches’ such as the CEST tool are not an acceptable method of IR35 status determination.

This de facto blanketing by institutionalised misrepresentation of answers to the CEST tool and ignoring the legal tests has been an abuse of the duty of determination entrusted to Public Bodies following the changes.

IR35 change provokes staffing exodus and crisis

“Not only the reforms themselves but HMRC’s encouragement of malpractice within the sector is driving away the essential skills that the NHS depends on,”

The fall out has been an exodus of contractors from the public sector across many sectors leading to delays in completion of public service contracts. The chronically understaffed NHS, even admitted by the Secretary of State for Health, has also been affected with less locum and agency workers willing to take extra shifts. A survey of 450 healthcare locums by ContractorCalculator showed that a quarter had left the NHS, 72% were considering changing careers and 87% said the reforms are already drastically impeding patient care. This does not bode well for our beloved National Health Service.

Dave Chaplin, ContractorCalculator CEO notes that “Not only the reforms themselves but HMRC’s encouragement of malpractice within the sector is driving away the essential skills that the NHS depends on,”.

Solutions?

It appears that there will be no resolution to this injustice without further legal action bearing in mind that this was one of the steps we had to take to reverse the "inaccurate" (read as unlawful) decision by NHSI to apply a blanket decision to place all locum workers inside IR35.

The lack of consideration of Mutuality Of Obligation by the CEST tool is one such judicial review challenge that would go a long way to resolving this for all public sector contractors, not just those in the health sector.

Help correct this unlawfulness!

We are crowdfunding a Judicial Review on the incorrect implementation and application of IR35 for healthcare workers

IR35 Seminar and CPD event

IHPA - LDU MK meeting

The LDU looks forward to welcoming you to its Locum Doctors Conference to be held at Double Tree Hilton, MK Dons Stadium in Milton Keynes, MK1 1ST, on Saturday 18th November from 9.30am - 3.30pm.

 

Agenda
09.30 am Registration and refreshments
10.00 am The President’s Address - Dr Ben Itsuokor
10.10 am IR35 update - Alex Peebles, Legal Counsel
10.50 am Management Training - Teamwork, Development and Problem Solving Part 1
12.20 pm Luncheon and networking
1.30 pm Teamwork, Development and Problem Solving Part 2
3.00 pm Wrap up and fairwells - Dr Ioannis Baraboutis

 

ID Medical is bringing us a hugely discounted CPD accredited management course which will provide you with certification on the day for 4 CPD points to add to your revalidation portfolio. Retailing at £199 we are given this at cost price of £50 inc VAT.

The CPD accredited course is part of the LDU conference and costs £50 inc VAT. The cost for non-members is £200 (the cost of membership) + £50 (event fee).

 

 

IHPA and new legal team reiterate mission

A new and powerful legal team

A new and a powerful legal team is being set up. This is due to new evidence that has come to us and are still coming in. This team will issue PAPLs to the trust within two weeks and a JR will follow. At our third general meeting on the 18/11/2017, Stephen and I will update you on the new strategies. I would advise you to attend the event. It’s best you don’t take any weekend shift on that day. There will also be an educational event with associated CPD points. We stand for you and by you.

Mission statement

The Locum Doctors’ Union (LDU) is an unincorporated association with the mission of supporting locum doctors to secure their rights by negotiation, mediation and litigation, as required. It does this by providing advice, assistance and a network for sharing relevant information and continued professional development. From an NHS Trust’s perspective, the LDU and HPU aims to facilitate a collaborative culture, to bring together the shared objective of ensuring the delivery of first-class patient care.

The benefits of membership

  1. Provide discounted CPD points
  2. Members will get discounted appraiser rates
  3. Medicolegal protection coming in the form of medic HR
  4. Indemnification of members at a rate cheaper than competitors
  5. Protecting members from unfair dismissal and claiming compensation for them
  6. Helping members to do audit using external audit companies
  7. Helping members who are being bullied in their trust
  8. Protecting against future HMRC investigation
  9. Help with MJR

The Healthcare Professionals Union (HPU) was formed on 11 May 2017. Its mission is to support nurses and allied health professionals throughout the United Kingdom by providing pastoral, legal and HR support networks.

LDU and IHPA main aims are:

(i) act to either injunct, halt or achieve an equitable resolution with regards to the latest IR35 guidance

(ii) stop the arbitrary blanketing of all Healthcare professionals into IR35 i.e. ensure that trusts follow guidance and take reasonable care when determining status

(iii) stop the imposition of double NICs i.e. payment of both employer and employee NICs

(iv) stop the “bullying or thinly veiled threats” in letters from trusts and/or agencies

(v) act on the interests of members on issues that are ascribed in the constitution, and/or other issues that might have a direct/indirect negative connotation on the aims and objectives of the union

Objectives:

(i) employ the services of a Public and Employment Law Barrister to consider the facts, and either write a non pre-action letter pending a pre- action letter, and/or legal action; and to look at the reliance and legality of an online tool to determine employment status; and to look at the derogation of powers from a public body (HMRC) to other public bodies and agencies that are neither qualified nor have the administrative resources to adequately carry out the task with reasonable care

(ii) employ the services of a Public and Employment Law Barrister to look at the facts, and write (on the unions behalf) legal representations asking NHSI, Trusts, and/or Agencies to take reasonable care when determining employment status

(iii) employ the services of a Public and Employment Law Barrister to look at the deduction of tax mechanisms of Trusts and/or Agencies at source, with a view to stopping unscrupulous corporate behaviour

(iv) employ the services of a Public and Employment Law Barrister to look at, and draft a legal response to correspondence of a “threatening or bullying” nature from Trusts and/or Agencies

(v) employ the services of a Public and Employment Law Barrister on retainer to provide legal services for the union on an ongoing basis

Healthcare workers who are directly employed by the NHS enjoy full employment rights.

  1. Job security
  2. Pension benefit
  3. Annual leave with pay
  4. Study leave with pay
  5. Stipends for Courses for CPD & ALS
  6. Maternity & Paternity leave
  7. Death in Service Benefits
  8. House purchase benefit / discount
  9. Discounted Appraisals

 

Locum Doctors and nurses under IR35

Locum doctors and independent healthcare workers are now determined as NHS employers only for tax purposes without full employers benefit as listed above.

  1. No job security; job could be terminated within 1hr
  2. No paid annual leave
  3. No pension or retirement plan
  4. No study leave with pay
  5. No Death in Service Benefits
  6. Must pay up to £900 to get appraised by independent appraisal body through agency
  7. Must pay for courses to get CPD points
  8. No paid Maternity & Paternity leave
  9. Not allowed to get NHS staff discount for house purchase
  10. Must work under IR35 as per NHSI
  11. Must pay PAYE tax, Personal NI, Employers NI.
  12. Cannot claim travel expenses
  13. Must pay for their temporary accommodation without reclaiming the expenses under IR35
  14. Will continue to travel long distance to cover for shift without claiming the travel expenses under IR35
  15. Will continue to travel long distances to work where they spend time away from their families in a temporary accommodation without extra income benefit under the new rule (IR35)
  16. Must work under NHS capped rate in most circumstances. This was introduced just about six months ago which has already slashed Locum Doctors income by 30%
  17. Further introduction of IR35 is aimed to completely remove any atom of extra pay benefit for being a Locum Doctor /nurse or a freelancer

We know that the disparity in benefits between the NHS’s permanent staff and its locums justify the higher pay rates that locums earn. But the new rules change everything. The imposition of IR35 treats locum doctors as ‘employed’ for tax purposes. They lose the tax benefits of being self-employed but don’t enjoy any of the benefits of permanently employed NHS staff.

 

Dr Ben Itsuokor
President IHPA/LDU