IR35 and Locum WorkBen Sweeney
Once you are experienced enough to be able to make the step into locum work, large numbers of doors will open up to you-from local practices, to opportunities for international travel and working abroad.
It can certainly be a bit daunting when you first make the leap and it is important to equip yourself with the right information as regards your business and personal finances
One thing is for sure, it is important to do your research and make sure that you are compliant with IR35 and look out for the interests of both yourself and your clients.
Here, we look at what exactly IR35 is and why it is important to all of us, both as services providers and the practices we work for.
What is IR35?
IR35, also known as ‘intermediary legislation’, was introduced by the government in 1999-2000 to tackle people working in ‘disguised employment’
Put in plain and simple terms, it was to catch the people who were doing exactly the same job as the person next to them day in day out but operating as a contractor rather than as an employee of that company. As a result, this was reducing their tax contributions significantly.
It is commonly believed that IR35 is designed to tax contractors, where in fact, it is designed as a legislative measure through which the government can tax organisations who are reaping the benefits of engaging self-employed workers. They can save large amounts of money, as by engaging a worker on a contract basis, the employer will not be required to pay Employer’s NICs or provide employment rights and benefits.
The most common and obvious examples of this are actually in the building and IT industries, where large organisations employ a purely contracted staff force for long periods of time in the same roles day in day out.
The key features of IR35 are three fold:
1. Control and Direction. Are you under the control of your client or do you have a degree of autonomy in your work? Can you make your own decisions in work or do you have to run everything by your manager/boss/employer?
2. Personal service/substitution. This is one of the more confusing aspects of IR35 that many people get worried by. Are you in a position where by you can provide or connect the practice with a suitable substitute should you be unable to fulfil your contractual arrangement with that client?
3. Mutuality of Obligation. All this means is that an employer would provide tasks to an employee on a regular and recurrent basis, whereas if you are a contractor, there is no guarantee from the client that you will have guaranteed ongoing work.
How does it affect vets and nurses who are locuming?
The impact of working within IR35 is that you will not be paying appropriate taxes if you are running a private company and neither will the employer, so at the end of the tax year, if HMRC investigates and finds you to be working within IR35 then you and the practice that you work for may have a hefty bill to pay.
The simplest way for us all to check our own personal employment status for tax is to utilise the HMRC CESTtool.
This will give you some insight into whether you are working within or outside of IR35, although I must caveat that by saying that I would always seek advice and we are certainly happy to advise and discuss your IR35 status at Simply Locumsto put your minds at ease.
A few examples of people working within the veterinary sector who may be affected by IR35 are as follows:
1. I work for one practice all the time but as a contractor and am on their rota
2. I work the same 2(or another number) days every week for the same practice and have been for the last year or two.
3. I work part time for a practice but my boss pays me as a contractor
4. I cover every Saturday for one practice
5. I can’t just take time off when I want to from the practice I am working at.
6. I am not part of Simply Locums so may not be able to provide a substitute to cover if I can’t work
All of these people are essentially in employed roles, be that part or full time. They are not in control of their own diary, they do not have the ability to provide substitute workers, and they seemingly can’t refuse work from employers,
Tips on working within IR35 as a vet or nurse
1. Control and direction-can you make your own decisions in work? This doesn’t have to mean over everything, but it is important to have a degree of control over your case management or do you have to adhere to a list set by the employer of things to do in XYZ situations. If you prefer to work with a certain suture material, will they order it in for you? can you order certain drugs?
2. Personal service/Substitution. As a contractor, you are a service provider and your client, in the case of our profession, the veterinary practice that you are working for. This is where having a service agreement between service provider and client is key. As part of this service agreement, you need to be able to demonstrate how you could provide a substitute in your absence. For example, as a Simply Locums memberyou can ask the community for assistance to cover a shift that you are not able to cover yourself, and hereby continue to offer your services to that practice through a third party or ‘subcontractor’ if you will. In reality, this subcontractor will have to be approved by the practice, but the Simply Locums platformand endorsement scheme does give you all significant opportunities to demonstrate you CV and profile to a prospective client practice and connect with subcontractors.
3. Mutuality of Obligation. Things like having a rolling contract are not advisable as this can be deemed as a contract of employment. In much the same way, simply having one after the other contracts in the same place can also be construed as being in a position of employment with one employer. Are you obliged to renew the contract each time or can you walk away? For the same matter, can you or the client disengage from a contract at any time?
Advice from Simply Locums
1. Work for multiple clients. Don’t get me wrong this does not mean you choosing to work for a different practice every week of the year, but be sensible in your bookings. You may be fine doing a maternity cover, but at the end of that period then you may be sensible to seek work at another practice
2. Have your own equipment. Now, you don’t need to go overboard on this and we aren’t expecting you to provide a consult table, dental machine or a set of stocks! However, having your own work clothing (with either your own company branding OR no company branding from the clients entity), your own stethoscope, perhaps even an ophthalmoscope and books would be wise in order to be able to offer your service to the client. If that client doesn’t have things, can you still do your job?
3. Set up your own business email address and consider having a separate company bank account if you are a sole trader. It may also be worth having a logo designed as well as having this on your invoices. This is very easily done with online accounting softwares which we can also advise you on. Whilst all of these are only small steps, it makes your business more professional and viable as a separate entity.
4. Regularly apply for jobs/contracts at practices which will show evidence of your autonomy in finding work (even if you don’t get them).
5. It may be advantageous if you are VAT registered.
6. Can you show evidence of your company investing in CPD training for you at any stage? This demonstrates evidence in a company (yours) investing in its own future.
7. Get food advice from those in the know. Our accounting partners are more than happy to chat things through and if you are still confused by it all then you can look into getting IR35 insurance.
It I indeed an exciting and prosperous time to be a veterinary locum, and it is important that as service providers we both look after our own business interests and those of our clients. At Simply Locums we are always more than happy to talk about any cases and help any of our fellow veterinary colleagues in the next steps they are taking. Here is to you finding your own #vethappy.