Supposed NHS U-turn fails to overturn "unlawful" application of IR35

24th October 2017
Written by Qdos Contractor

 Unions Claim NHS Are Encouraging Trusts to Find Off-Payroll Workers Inside IR35

It wasn’t so long ago that the NHS announced a U-turn of its decision to determine all off-payroll workers inside of IR35, following the introduction of IR35 reform into the public sector in April 2017. Six months later, the U-turn seems to have done very little to overturn what some unions claim to be an “unlawful” application of the tax rules.


NHS Improvement’s initial reaction to the off-payroll rules was simply to state that anyone operating off-payroll would automatically be deemed to fall inside of IR35. This decision was obviously met with uproar, with many NHS workers threatening to leave the UK and practice overseas unless the blanket rules adopted were reversed.


What followed was an IR35 Update issued by NHS Improvement (NHSI) in May 2017, which stated that the blanket decision previously adopted was not the correct approach and that decisions regarding tax status should be made using facts, on a “case-by-case-basis.” Ultimately, decisions regarding the tax status of locum agency and bank staff should be made by the NHS Providers (i.e. NHS Trusts), who engage such staff.


The supposed NHS U-turn announced in May of this year appears to have done little to appease the unions, and it seems that many NHS workers are still in the same position as when IR35 reform was first introduced.  Members of the Locum Doctors Union (LDU), and Healthcare Professionals Union (HPU), claim that NHSI are encouraging trusts to find off-payroll workers inside of IR35, and have appointed legal counsel to proceed with an application for a judicial review.


Additionally, according to LDU and HPU, the personnel appointed by the NHS Trusts to review each case and determine the tax status are not qualified to do so. This is despite both unions taking matters into their own hands and issuing guidance on how the assessments should be carried out, to provide a fair opinion.


President of the Locum Doctors Union, Dr Benedict Itsuokor, said: “Following the U-turn in May, the feeling was that the fair and lawful implementation of IR35 within the NHS had been resolved amicably to all stakeholders’ satisfaction…..However, our members are reporting instances of IR35 being applied without the necessary assessments of individuals workers’ status.”


This seems to contradict what the IR35 Update in May intended to achieve which was to ensure that assessments were carried out, “fairly, accurately and take into account all relevant factors, including representations which may be made by the individual.”


The failure of the NHS’ supposed U-turn simply serves to highlight just how difficult it is to manage the implementation of the tax rules in such a vast institution, and we may well see more legal disputes of this nature. Whether or not NHSI decide to step in is unclear at this point, but if they do they’re likely to have a much harder time convincing the unions of “fair and accurate treatment” of its members.


Qdos Contractor
Written by
Qdos Contractor
Award-winning providers of insurance for the self-employed, Qdos are the leading authority on IR35, offering industry-leading employment status services to ensure the flexible working industry thrive. Qdos are the Best Contractor Insurance Provider 2022 and won the Queen’s Award for Enterprise in Innovation 2022 and 2017. 

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