Historically locums have been regarded as self employed by most people in the medical, dental, ophthalmic and veterinary profession and in general accountants have gone along with this and by and large so has the HMRC.
In the last couple of years however HMRC have been showing considerable interest in the tax status of locums i.e. whether they are self employed or are in fact employees of the practices they’re working at.
The issue of whether somebody is self employed or employed is one that HMRC have taken up in many industries and it is unlikely that this will ever cease. When tested in the Courts it boils down to what the relationship is between the “employer” and “employee” and how they are engaged. Essentially the Courts look at the way that one person acts for the other person and what is written in the contract, if indeed one exists.
HMRC look for signs of employment and would ask the following types of questions:-
• Does the locum chose the day/times that he or she works?
• Is the locum able to take time off when he or she likes?
• Does the locum have to have professional indemnity insurance?
• Does the locum provide major items of equipment?
• Does the locum work at his or her own premises (unlikley)?
• Does the locum engage his or her own staff?
• Does the locum keep any new patients who are referred to him or her?
• Could the locum engage a substitute?
Anyone engaging a locum should consider the above questions and generally consider the relationship they have with them. At the end of the day if HMRC come after somebody it will be the person they consider to be the employer and not the employee as it would have been their responsibility to have deducted tax.
In order to get things in place you should consider some of the following actions:-
• Ensure that at some point work is offered to the locum which they reject in writing.
• Try to vary the days that are worked.
• Don’t include the locum on the practice’s PI policy.
• Limit the amount of control exerted over the locum.
• Ensure that the locum is responsible for finding a substitute should they be unable to work.
• Consider a substitute retainer.
If you’re concerned about the situation with your locum and would like to discuss this please contact us to discuss this with us on a confidential basis.
