Independent healthcare professionals raise concerns about tax rules

Almost all (98%) of independent healthcare professionals would consider seeking work outside the NHS in response to a real-terms pay cut caused by blanket IR35 tax reforms, according to a new survey.  

The research by the Independent Health Professionals’ Association is based on a survey of 537 independent healthcare staff.

Seventy per cent of those questioned said they would contemplate taking up positions with private UK healthcare providers. Half of independent healthcare workers said they would also consider working outside the EU if they were deemed to be within the restrictions of IR35, while a third (32%) would look for healthcare work in another EU country.

Those IHPA says those deemed to be inside the IR35 tax rules have seen incomes slashed by 30% – 50% due to being taxed as fully employed, despite not being entitled to rights such as maternity leave or sick pay. These staff are also required to personally cover required expenses such as long-distance travel and indemnity insurance, which can total thousands of pounds.

IR35 was introduced in 2000 with the aim of countering tax avoidance and specifically aimed at the limited company contractors that organisations hire. It is designed to combat ‘disguised employees’ – which HMRC believes would be employees of the client if they did not work through a limited company. New legislation introduced for the public sector in April 2017 moved the onus of evaluating IR35 tax status from the worker’s own company to the public sector body hiring the worker. These are now liable for collecting taxes and ensuring compliance and there have been concerns over the way employers have interpreted the law.

A recent inquiry into disguised employment related to the BBC raised big concerns over the issue and how contractors are facing huge tax bills despite being encouraged to contract out by their employers and missing out on employment rights.  The IHPA survey comes at a time when the Government has announced plans to consult on extending the legislation to the private sector.

Ben Itsuokor, consultant geriatrician and president of the IHPA, said: “It’s highly troubling that certain NHS Trusts are pushing ahead with their unfair implementation of the IR35 rule, which leads to locums being falsely classed as inside IR35 due to blanket and incorrect implementation of the IR35 rules, with them subsequently losing up to half their income. 

“Distressingly, stories have now emerged revealing that vulnerable locums are being encouraged towards unsustainable, questionable tax arrangements which could leave them facing life-changing tax bills long-term. This, coupled with the ongoing NHS crisis, looks set to drive a backlash of locums leaving the service, and even the country, due to contract work becoming economically unviable, creating severe staff shortages.”

Independent healthcare professionals were also questioned on what they feel is putting the biggest strain on care provision in the NHS, with staff shortages topping the list. 85% of independent healthcare professionals warn that ongoing staff shortages will cause a decline in NHS patient safety. A further 64% of respondents believe that funding cuts are responsible, with 54% stating that management, internal bureaucracy and wastage are to blame. Over one in five (21%) believe that a decline in patient care standards is being driven by the number of patients using the service without genuine need.

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