IR35 Public Sector Rules & the NHS in Crisis

Are the IR35 public sector rules a contributing factor?

The NHS ‘crisis’ has been reported heavily in the press of late. Twenty hospitals have declared themselves to be in a ‘black alert’, where the safety of patients is severely compromised due to increased levels of patients requiring care and 23 hospital trusts have declared that they cannot cope with the current pressures.

Resources are a significant issue with the NHS struggling to fill essential roles. The UK’s Independent Factchecking Charity teamed up with independent health experts, the Nuffield Trust, to discuss the mounting pressures the NHS is currently being subjected to, and stated that;

“…In each country, regulators and independent bodies have expressed concern that agency staff are typically far more expensive, increasing financial pressure.

Nursing shortages leading to unfilled vacancies have become a serious issue across the UK. The Migration Advisory Committee found that as of 2015, 31,000 posts (or around 9%) were not filled in England alone…”

The changes implemented to IR35 in the public sector in April of last year cannot have done anything to help the situation. Many agencies who engage self-employed workers may now, under the revised IR35 rules, have to declare such workers as employees and pay them on a PAYE basis which could certainly result in an uplift of their fees to the NHS.

Additionally, despite HMRC’s comments stating that the new rules have not resulted in shortages of resources in the latest IR35 Forum which was held on 17 July 2017, it appears that many contractors are avoiding working for public sector organisations. The BBC reported on 05 April 2017 of the Queen Elizabeth the Queen Mother hospital anticipating that locum doctors would refuse work because of the drop in pay.

“About 80% of Margate's Queen Elizabeth the Queen Mother (QEQM) hospital's middle grade doctors in the emergency department are locums, according to a document seen by BBC South East.”

In May 2017, NHS Improvement issued an IR35 update which advised that blanket determinations should not be issued by NHS Trusts but that each case should be looked at on its own merits, and that;

“…an assessment of whether or not IR35 applies should be carried out in a fact-specific way; that is, it should be applied on a case-by-case basis, rather than by a broader classification of roles.”

Despite this, it appears 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.

It seems that the changes to IR35 could well have impacted on the current crisis within the NHS, particularly due to a lack of locum doctors, many of whom refuse to work with a 20% reduction in their pay, due to what many claim, to be incorrect IR35 determinations. HMRC must face reality and fully consider the impact made by the change in legislation, which was another hit the NHS simply couldn’t take.