Tax changes could make work as a locum ‘untenable’, pharmacy bodies warn

Some six pharmacy organisations have warned that HM Revenue and Customs’s proposals could lead to pharmacy locums paying the same tax as employees, making their position “untenable”.


Changes to off-payroll working rules could deter pharmacists from working as locums, according to a joint statement from six pharmacy bodies.

In their response to HM Revenue and Customs’s (HMRC’s) ‘Consultation on off-payroll working rules from April 2020’, the Royal Pharmaceutical Society, Company Chemists’ Association, National Pharmacy Association, Association of Independent Multiple Pharmacies, and locum agencies Team Locum and Locate a Locum, expressed concerns about HMRC’s way of determining whether a worker is self-employed or classified as an employee.

HMRC’s consultation, which opened on 5 March 2019 and closed on 28 May 2019, sets out proposed changes to off-payroll working rules, which will apply to the private sector from 6 April 2020. The changes were introduced for the public sector in April 2017. 

However, the six bodies say that working as a pharmacy locum could become “untenable” if these proposals go ahead, because locums could end up paying the same tax as employees, “but without the same access to employee rights”.

HMRC says the changes are intended to increase compliance with existing off-payroll working rules.

The changes hinge on legislation called ‘IR35’ — a set of tax rules for contractors who work for a client through an intermediary. As a result, locums who have set up their own limited companies will be impacted by the changes, as so-called ‘personal service companies’ are considered intermediaries.

According to HMRC, IR35 rules are intended to ensure that individuals who work like employees are treated as employees for tax purposes.

In their consultation response, the pharmacy bodies said that “the nature of working as a contractor or locum … may meet the HMRC’s ‘tests’ for employment and this may lead [HMRC] to declaring that all workers are ‘employed’ for employment tax status”.

In consequence, they said, the pharmacy workforce would become less flexible as fewer pharmacists would be willing to undertake locum work. This could potentially disrupt the supply of medicines and services, they added.

Their response also warns that the proposed changes could add a “huge” administrative burden to clients — those employing the pharmacist’s services — as the onus would be on the client to test the employment status of all off-payroll workers, each time they are engaged.

They suggested that a possible solution could be for the clients to “conduct an assessment based on the roles and responsibilities the worker will have, rather than an assessment of individuals in the same post”.

Although the proposed changes would not apply to small businesses (one that has two of: an annual turnover of below £10.2m; a balance sheet of under £5.1m; or not more than 50 employees), the consultation response says most community pharmacy businesses are not classed as small, meaning that the sector would therefore be adversely impacted.

Last updated
The Pharmaceutical Journal, PJ, June 2019, Vol 302, No 7926;302(7926):DOI:10.1211/PJ.2019.20206641

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