The off-payroll working rules – commonly referred to as IR35 – are intended to ensure that individuals who work like employees pay broadly the same employment taxes as employees. Photo: iStock

The Pharmacists’ Defence Association (PDA) has advised locums that they are under “no direct obligation” to help contractors gather data for an HM Revenue and Customs (HMRC) investigation.

However, they may choose to assist the large contractors “to help ensure HMRC reach a final decision based on all the relevant facts,” PDA said.

The HMRC investigation into the tax status of locums forms part of the extension of the IR35 arrangements into the private sector.

The IR35 came into effect from April to ensure that individuals working like employees through their own limited company pay the same income tax as paid by those employed by a company.

In recent weeks, some contractors have contacted locum pharmacists to assist them in data gathering on their work arrangements.

PDA pointed towards possibility of a tax liability for contractors in case the HMRC determines that locums should be treated as employees for tax purposes.

PDA stated: “This will impact on whether tax is deducted from agreed fees before payment to the locum, and could also cause the pharmacy contractor to be financially liable for any unpaid tax that should previously have been due.”

Some contractors have even engaged advisors to speak to locums and collect evidence about the relationship between the two, which contractors may use to dispute any HMRC decision.

PDA has advised locums to speak to their accountant regarding the tax implications.

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