In his recent letter (Pharmaceutical Journal, 5 May 2007), A. Matalia implies that IR35 is a major consideration before signing standard operating procedures (SOPs). In fact, IR35 is only of relevance if an intermediary (company or partnership) is used by a locum when contracting for work.
Of far more importance are the factors determining the employment status of the locum. This part of tax law is constantly evolving and each case must be looked at individually. Control of work is only one factor to be considered among many including:
- Financial risk;
- Length and frequency of assignment;
- Right of substitution at locum’s own expense;
- No rights to holiday or sick pay;
- The provision of tools of the trade.
The emphasis that HM Revenue and Customs (HMRC) puts on these factors will vary as the attitude of the court varies. An indication of the current emphasis can be found in the questions in the employment status indicator on the HMRC website. A number of those questions relate to the right of substitution. This in turn highlights the need for a contract to be put in place between the pharmacist and locum that not only covers this point, but also shows clearly the intended legal relationship.
The Royal Pharmaceutical Society requires that all pharmacies should have SOPs covering the dispensing process and there are legal requirements to have SOPs for handling Controlled Drugs. The signing of SOPs should not jeopardise a locum’s self employment status if all the locum is doing is signing to say that they have read and understood the dispensing procedures of a particular pharmacy. As stated above, it is the contract between pharmacist and locum that is the crucial document. A SOP may be taken as supporting evidence for an argument, but it is doubtful that it will be conclusive on its own.
If relevant, the locum need only sign the relevant sections of the SOPs relating to the dispensing of medicine and disregard any sections relating to employment issues and procedures.
The IR35 does not determine whether a locum is a deemed employee. A well written contract and a well written SOP will protect a locum’s self employed status.
Richard Maw, finance director, National Pharmacy Association
