Am I inside or outside IR35?

Q. I am a Locum Pharmacist working in the NHS. I want to ascertain as to whether I am in or outside the IR35 legislation. Please can you advice me as it is very worrying.

A. IR35 requires an examination of the contractual and working arrangements between the worker and the ultimate end user, in this case the NHS, to ascertain, if it were not for the imposition of the worker’s limited company, would the worker be a ‘disguised employee’ of the end user. There are a number of employment status tests to consider to build up a picture of what is called the ‘hypothetical contract’. It is then a question of weighing up all the factors and making a decision on the worker’s employment status.
 
The two most important status factors are control (right of) and personal service (right of substitution). If the NHS has no right of control over the manner in which you carry out your work and you have the right to either send a substitute worker in your place, should the need arise, or sub-contract some of the work or engage other workers to assist you, then it is likely that your contract will fall outside of IR35. However, with you providing your services to the NHS, it is likely that you will be working in a controlled environment and therefore the issue of control maybe an area in which you cannot satisfy this test. Just because you fail one test does not mean that IR35 automatically applies as it is necessary to examine all the employment status tests before deciding on whether or not the intermediaries legislation applies.
 
The NHS is one of those public bodies that are required to seek IR35 assurances from workers, ie evidence that they are operating outside of IR35, where a worker is earning £220 per day or more over a 6 month period. Where a pubic body is not satisfied with the evidence they can force the contractor to operate within IR35 or terminate the contract for a failure to do so. Stricter rules for public sector bodies, of which the NHS is one, are proposed to come into effect from 06.04.17 whereby agencies/public sector body will deduct PAYE tax and NIC from the contractor’s earnings if they fail an online status test.
 
It is imperative that you seek professional advice regarding your IR35 position, as HMRC will also expect you to consider whether or not IR35 applies to your contract as part of the end of year RTI process. To this end I would recommend that you contact Qdos to have them review your contract and your working practices and provide you with an overall opinion. They can be contacted by visiting www.qdoscontractor.com.

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