This is an enduring subject. Is the GP locum an employee or self employed? I suppose this issue comes up almost weekly, and the answer is… it depends. And it largely depends on the contract between the parties and how it works in practice. Every now and then an important case makes headlines and a little more light is shown on the issue.
The next time you travel to the airport and wander through duty free, pay a little more attention to the people encouraging you to try new perfumes and fragrances.
Some of these people are supplied by an agency called Talentcore and have been working on the basis that they are self employed. HMRC challenged this view and brought an action against Talentcore, and the tribunal have just issued their judgement and confirmed, that these people are indeed self employed.
The judge concluded: 'The fact that original consultant had complete freedom to arrange for a substitute if he wished, even if he did not actually do so, constitutes in my view an unfettered right of substitution.' This right of substitution is now extremely important in determining self employment.
In practice what does this mean? Well, in the arrangements between a GP practice and a GP locum, the locum should have the right to appoint a substitute in his place. This may be disconcerting for the practice, and it may be acceptable for the practice to keep a list of approved locums to select a substitute from, but without this power, the balance will tip in favour of HMRC’s employed argument.
Of course it is not enough to have the right of substitution on paper alone; being able to show it was used will be very helpful in substantiating self employment.
What are the consequences of getting this wrong? Consider this real case: a practice engages a locum and pay him £35,000 in a financial year. The practice expects him to pay his tax and NIC.
In the meantime he writes to HMRC and tells them he is employed and that the practice are not operating PAYE properly. HMRC approach the practice and recover the tax and NIC on a net salary (not gross fees paid) of £35,000.
Time to look at your locum arrangements...
More resources on the subject from GPonline.com
- Ask the Experts – Tax if self-employed
