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PDA comment as large employers respond to HMRC investigation into tax status of locums

The PDA has written to locum members after some large pharmacy contractors have contacted locum pharmacists asking them to provide details of their working arrangements. This is connected to the HMRC investigation into the tax status of locums which forms part of the extension of the IR35 arrangements into the private sector.

Thu 4th November 2021 The PDA

Locum pharmacists have approached the PDA after being contacted by representatives of some of the largest pharmacy contractors asking them to participate in data gathering exercises by answering some questions about their work arrangements.

Locum pharmacists should already be aware of the introduction of IR35, initially in the public sector and now across all sectors and the HMRC have been undertaking a significant review into community pharmacy regarding the application of IR35 to locum pharmacists.

If HMRC determine that locums should be treated as employees for tax purposes this will impact on whether tax is deducted from agreed fees before payment to the locum, and could also cause the pharmacy contractor to be financially liable for any unpaid tax that should previously have been due. This could be a considerable liability for contractors.

As HMRC proceed towards the outcome of their investigation, some large pharmacy contractors have engaged advisors to speak to locums to gather their own evidence about the relationship between locums and pharmacy contractors and the activity they undertake, which they may use to dispute any HMRC decision.

The advice to Locums from the PDA is that while they while they may choose to assist the large contractors gather data, they are under no direct obligation to do so, but may choose to do so to help ensure HMRC reach a final decision based on all the relevant facts.

Locums may also want to consider the wider implications for their relationship with the contractor if they become treated as an employee for tax purposes, as being considered an employee for the purposes of employment status would have implications for employment entitlements.

The PDA is happy to assist members who would like to discuss employment status but reiterate that the PDA team are not tax lawyers and cannot give tax advice.  PDA membership does include access to a free 24-hour tax advice helpline which provides over-the-phone advice about the law in England and Wales and is available 24 hours a day, seven days a week.

For further detailed advice regarding the effect of self-employment or employment status, locums should speak to their accountant regarding the tax implications.

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