IR35 - Frequently Asked Questions

Transcription

1 IR35 - Frequently Asked Questions 1. How did the Trust engage with GPs prior to this change in HMRC legislation? Up until this current change in legislation the GPs engaged by the Trust, to provide clinical support across a range of services, have been treated as self-employed and referred to as sessional GPs. As recently as March 2017 the tool available to the Trust to test GP employment status was the publically available Employment Status Indicator (ESI) on the HMRC website. When the ESI was used by the Trust, and the indemnity Insurance GP s must pay for personally was defined as a financial risk in the assessment, the outcome was self-employed. As of 20 March 2017 the HMRC ESI has been replaced with the Employment Status Service (ESS) in readiness for the future introduction of IR What is IR35? IR35 is also known as the Intermediaries Legislation. It is a set of rules that affect tax and National Insurance contributions if an individual is contracted to work for a client through an intermediary. Individuals may need to follow IR35 if they work for a client through an intermediary. The intermediary can be: Your own limited company; A service or personal service company; A partnership. HMRC have updated the current Intermediaries Legislation to apply it to off-payroll working in the public sector, regardless of when the work / service was performed. This will impact on all payments made on or after 6 April Why is my status with the Trust changing? HMRC has introduced the Intermediaries Rules (IR35) with effect from 6 April As a result HMRC has removed the publically available Employment Status Indicator (ESI) and replaced it with the Employment Status Service (ESS). The ESS checks the employment status of an individual or group of workers, determining whether they are employed or selfemployed for tax, National Insurance or VAT purposes and is the only method for considering this status accepted by HMRC. HMRC have mandated that all off-payroll roles must be processed through the ESS to determine your status and that users must abide by the answer and act accordingly. Further, the responsibility for determining a public sector contractor s IR35 status has moved from the contractor to the public sector body. When your sessional GP role is processed through the ESS the determination the Trust has received is that you fall within the scope of the new legislation. As such tax and National Insurance Contributions need to be accounted for as part of the payments that the Trust makes to you. Page 1 of 8 V1 06 April 2017

2 4. When I use the ESS to assess my employment status the outcome is that the intermediaries legislation does not apply to my engagement with the Trust and that I should pay tax and National Insurance as a self-employed individual. Why is the Trust stance different? The Trust has consulted with tax experts at PricewaterhouseCoopers (PwC) international accountancy firm and a selection of sessional GP s in order to establish the working relationship between the Trust and its sessional GPs. It has used this information to provide the answers for the ESS. Differences in outcome on completing the ESS are generally due to answers in relation to either; the right of substitution or the provision of equipment. This relates to the questions: Would the end client accepting the worker's business sending someone else to do this work instead? ; and What does the worker have to provide for this engagement that they can't claim as an expense from the end client or an agency?. The Trust does not accept substitution by individual sessional GP s. The question in relation to equipment is often misinterpreted but it can only be answered yes if the individual provides large items of equipment. For each service where the Trust engages GPs, the Trust provides the equipment necessary for sessional GPs to perform their roles and therefore answers no to this question. The Trust has prepared a reference document that sets out how the Trust responds to each of the questions within the ESS and provides the reasons for the response where required. This is attached at Appendix Why is it happening now at what point did the Trust know about this? This is happening as a result of the introduction of the Intermediaries Legislation (IR35) from 6 th April The final HMRC consultation closed on 31 st January Subsequently HMRC published a policy paper Off payroll working in the public sector: changes to the intermediaries legislation on the 8 March 2017 and the ESS was released in draft on the 2 March The legislation was not finalised until 20 March On receiving confirmation of the changes in policy, and following the release of the ESS by HMRC, the Trust has been seeking specialist advice on how this affects the GPs engaged by the Trust as these are classified as off-payroll workers. 6. Why is there such short notice from the Trust as to the change in process? The Trust has been working closing with PwC since January 2017 to understand and challenge the implications arising from the updates to the IR35 legislation. However the Trust could not take any formal action until the ESS had been released and the legislation had been finalised (20 March 2017). The Trust Board was briefed by PwC on the 30 th March 2017, at its Board meeting, regarding their findings and agreed the approach set out within the letter issued to you on Page 2 of 8 V1 06 April 2017

3 the 4 April Namely that, as of the 6 th April 2017, the Trust has decided it will only engage GP services via a Personal Service Company (PSC). 7. Does this apply to all GP roles in the Trust? Yes however, the Trust recognises that sessional GP staff that work in the Tiverton Urgent Care Centre (UCC), 999 A&E Hub GPs and Somerset 999 Car GPs are different to Out of Hours sessional GPs. This is due to the non-core GP activity they perform, which gives them a skill set over and above that expected of a GP. This is currently already reflected in the Trusts practice of providing indemnity cover for GPs performing these roles. In light of the significant differences in GP roles in the Trust, those working in Tiverton UCC, the 999 A&E Hubs and Somerset 999 GP Cars are being offered an alternative option of becoming a bank employee for the Trust from 6 April This option is only available for the work performed in the roles specified of: Tiverton UCC, 999 A&E Hubs and Somerset GP car. The letter dated 4 April 2017 will still apply for any work you may undertake for the Trust in the Out Of Hours service. 8. What is a PSC? The term PSC is used to describe a common type of limited company that is established by contractors, consultants and other types of self-employed workers. In short, a PSC sells the work of an individual or small group of individuals, and is owned and operated by that individual or small group of individuals as a limited company. 9. Is this actually being driven by a Trust decision to change its employment policies? HMRC have chosen to introduce the Intermediaries Legislation (IR35) for the public sector from 6 th April The Trust does not have the choice as to whether Tax law is complied with. The Trust must comply and there is a strict penalty regime in place that could result in significant penalties for non-compliance. HMRC has stated that it intends to police the new legislation from the outset and therefore the Trust must adhere to the new rules from the date of implementation. 10. I hear it will take weeks to set up a PSC, what am I supposed to do now? A Personal Service Company can be set-up in 24 hours providing you have all the necessary documentation ready. 11. Why does this not apply to some other providers of Out of Hours services? The introduction of the Intermediaries Legislation (IR35) only applies to public authorities, suppliers of staff to the public sector and contractors who provide their services to a public authority through an intermediary. Private providers that provide a fully managed service, (that has no involvement from the public body they are providing it to), are currently considered to be outside of the new rules. The Trust understands that HMRC may be considering whether this is appropriate where such organisations are providing core NHS services. Page 3 of 8 V1 06 April 2017

4 12. Why can I not carry on working for you as a self-employed sessional GP? As a result of the introduction of the Intermediaries Legislation the status determination tool has changed from the ESI to the ESS. Whilst under the ESI you were classed as selfemployed, and the Trust treated you as such, under the new ESS (which is the only allowed method of determining employment for tax purposes) you are no longer classed as self-employed. Therefore the Trust cannot continue to engage your services as before. 13. Have you escalated this to NHS England or another central body? The Trust has been in communication with NHS Improvement and HMRC highlighting the Trusts concerns regarding the impact this could have on our sessional workforce and the services that the Trust provides. NHS Improvement has issued guidance regarding the expected compliance with the new rules and the expectation is that all roles including GPs will fall within the scope of the legislation. 14. If have already established a PSC or if I chose the PSC option what deductions will come from my pay? The Trust will make the relevant deductions through PAYE for employees National Insurance Contributions at a rate of 12% and tax at a rate of 20%. 15. If I chose the bank employed option what deductions will there be from my pay? The Trust will make the relevant deductions through PAYE for bank employees National Insurance Contributions at a rate of 12% and tax at a rate of 20%. You will also be eligible for to be a member of the NHS Pension Scheme. If you become / are a member the relevant pension deductions will also be made. 16. What will my hourly rate be? If you chose to be engaged via a PSC the hourly rate will be the same as you are currently paid as a sessional GP. If you are bank employed by the Trust via a bank contract the hourly rate will be the same as you are currently paid as a sessional GP, with an 11% increase for annual leave. 17. If the employed option is a bank contract what happens about holidays and sick pay? Bank contracts with the Trust do not attract sick pay but do have an additional 11% added to worked hours in lieu of holiday pay. 18. What are the implications with regard to indemnity insurance? Page 4 of 8 V1 06 April 2017

5 As a bank employee you would be covered by the Trust s NHS Litigation Authority NHSLA Insurance. We are seeking further clarification with regards to PSCs, but the current understanding is that NHSLA would also apply. 19. What are the implications with regard to my NHS Pension? PSCs will not receive pension contributions from the Trust, nor will you be required to contribute to your NHS pension scheme with the income earned as a PSC. For those bank employed by the Trust, those GPs will continue to receive pension payments and deductions in line with the NHS Pension Scheme terms and conditions. 20. I am already a PSC how will this affect me? If you are already a PSC please provide the Trust with the required details using the GP PSC registration form attached to the notification letter (issued 4 April 2017). A further copy is provided at Appendix 2 for ease. Post 6 April 2017 payments made to your PSC will be made net of tax at 20% and employees NI at 12% on 25th of each month. You will be able to take account of payments already taxed when calculating your tax and national insurance via your company accounts. Page 5 of 8 V1 06 April 2017

6 Appendix 1: Employment Status Service (ESS) Questions and Responses The table below sets out the questions from the ESS (when completed from the end client perspective), the Trust s response for sessional GPs and the basis of this response where further explanation is required. ESS Question Trust Response as per the ESS Basis 1. Which of these describes you best? The end client Completed on behalf of the Trust 2. Has the worker already started this particular engagement for the end client? Yes This is based on ongoing work 3. How does the worker provide their services to the end client? As a sole trader This is based on individual GPs 4. Is the worker or their business an office holder for the end client? No 5. During this engagement has the worker s No it has never This is on the basis that there is no business arranged for someone else to do happened substitution of GPs the work instead? 6. Would the end client accept the worker s business sending someone else to do the work instead? 7. Has the worker s business needed to pay a helper to do a significant amount of the work? 8. Can the end client move the work to a different task or project that they originally agreed to do? 9. Once the worker starts the assignment, can the end client decide how the work is done? 10. Can the end client decide the schedule of working hours? 11. Can the worker choose where they work? 12. What does the worker have to provide for this engagement that they can t claim as an expense from the end client or an agency? 13. What the main way the worker is paid for this engagement? 14. If the end client isn t satisfied with the worker s output, when would the worker have to put it right? 15. Is the worker entitled to any of these benefits from the end client? 16. Does the worker interact with the end client s customers, clients, audience or users? 17. When the worker interacts with the end client s customers, clients, audience or users, how do they identify themselves? No No Yes but only with the worker s agreement The end client can t decide how the work needs to be done because it s a highly skilled role The worker and the end client agree a schedule No the task determines the work location Other expenses including significant travel and subsistence expenses (not including commuting) or the cost of business premises outside of the home An hourly, daily, weekly rate They can t put it right as the work is time-specific or for a single event Yes Yes They work for the end client This is on the basis that there is no substitution of GPs Within each service provided by the Trust, the Trust funds any necessary support in terms of roles (i.e. GP drivers, receptionists, nurses etc.) The Trust provides the equipment, materials and vehicles required to undertake the role. The Trust considers indemnity insurance to be classified as other expense therefore this answer has been selected This is based on the hourly rate There are no benefits such as annual leave etc. Patients This is on the basis of the contract in question Page 6 of 8 V1 06 April 2017

7 Date Received: GP PSC Registration Form Please write clearly and use BLOCK CAPITALS throughout. Please complete Sections 1 4 Section 1 Personal Details Surname First Name Middle Names Maiden Name Date of Birth Home Address Title (Dr/Mr/Mrs /Miss/Ms) NI number Preferred First Name Previous Name/s Marital Status Emergency Contact Details Name Relationship Home Address Gender (M/F) Home Tel No. Mobile Tel No. Address GMC Registration No Work Permit No. Company Name Registered Office Address Section 2 Equal Opportunities Home Tel. No Mobile Tel. No Work Tel. No Expiry Date Expiry Date Company Registration No VAT Registered? VAT No: Ethnic Origin Category Nationality See back page for category listing Country of Birth Sexual Orientation (Please circle): Heterosexual / Gay / Lesbian / Bisexual / I do not wish to disclose Religion and Belief (Please circle): Atheism / Buddhism / Christianity / Hinduism / Islam / Jainism / Judaism / Sikhism / Other / I do not wish to disclose Disabled (Y/N) If yes, please state the nature Page 7 of 8 V1 06 April 2017

8 Section 3 Payment Bank Account Details Bank or Building Society Name Branch Address Name (as registered on account) Account Number Roll No. (Building Society only) Section 4 Signature Sort Code By signing Section 4 you are consenting on behalf of the company to provide services to SWAST as a PSC (Personal Service Company) Signed on Behalf Date of Company Position and Print name Ethnic Monitoring Categories A B C D E F G H J K L M N P R S Z White British White Irish White Any other White background Mixed White & Black Caribbean Mixed White & Black African Mixed White & Asian Mixed Any other mixed background Asian or Asian British Indian Asian or Asian British Pakistani Asian or Asian British Bangladeshi Asian or Asian British Any other Asian background Black or Black British Caribbean Black or Black British African Black or Black British Any other Black background Chinese Any other Ethnic Group Not Stated Page 8 of 8 V1 06 April 2017