7 June 2019
Community pharmacy sector concerned about new tax proposals
The Company Chemists’ Association (CCA), the National Pharmacy Association (NPA), the Association of Independent Multiple Pharmacies (AIM), the Royal Pharmaceutical Society (RPS), Team Locum and Locate a Locum have issued a joint response to an HMRC consultation highlighting our concerns about how proposed changes to tax law might impact the sector.
HMRC consulted on their proposals for implementing changes to tax law known as IR35, or “off-payroll” working rules, between 5 March to 28 May 2019.
However, there are other changes taking place with HMRC conducting a wider review of the use of self-employed locums which could affect a larger proportion of the sector than the IR35 reforms.
Hannah Skinner from Locate A Locum, said: “We want everyone within the UK Pharmacy sector to be aware of what is being proposed and to have clarity on what steps may need to be taken to prepare for this change.”
Malcolm Harrison, Chief Executive of the CCA, said: “We have worked across the sector and engaged with HMRC to highlight our collective concerns and to call for more clarity and support for community pharmacy. HMRC are challenging the norms that have existed around the use of locums and self-employed pharmacists and everybody needs to be attuned to change. There are steps that individuals and businesses can take to prepare and we’d advise everyone to be as proactive as possible with the information and tools currently available.”
Our response to the off-payroll consultation identified that:
- HMRC need to ensure that the Check Employment Status for Tax tool (CEST), which is being promoted by them as the means of determining tax status, is fit for purpose. We believe that this tool is not refined enough to meet the needs of the community pharmacy sector. Those using the tool need to be confident that it’s accurate and fair in all cases.
- We have significant concerns that, following these reforms, the flexibility of the pharmacy workforce may be affected to the extent that it disrupts the necessary supply of medicines and services to patients.
- The IR35 reforms are complex changes which will be difficult to embed across the diverse populations of workers that exist across the private sector. We need HMRC to provide a detailed timetable for rolling out the reforms and clear, ongoing, communications about how to prepare.
What actions should locums and ‘engagers’ (or employers) take?
- Don’t assume your tax status if you’re self-employed or a locum. If you are an employer, don’t assume the status of those you engage.
- Make yourself aware of what your CEST determination is. Access it here: https://www.gov.uk/guidance/check-employment-status-for-tax
- Visit the government’s website and read about IR35: https://www.gov.uk/topic/business-tax/ir35
- Read the HMRC’s guide for organisations that sets out what actions they should be taking now to prepare for the changes ahead of April 2020. You can find this on gov.uk https://www.gov.uk/guidance/prepare-for-changes-to-the-off-payroll-working-rules-ir35
- Keep an eye out for further messaging including the HMRC’s publication of draft legislation and the summary of responses to the consultation.
Notes to Editors
Media briefing: IR35 regulations
Many people today choosing to work in a more flexible and diverse way. This can often determining the employment status of workers who are directly contracted or via third party service providers has become more complex. Employment status can have an impact on the way in which tax and national insurance is paid and, in some cases, the amount paid. IR35 regulations were introduced in 2000 to address this variation and bring equity between the amount of tax paid by employed and off-payroll workers for doing the same role, in the same conditions.
Employed pharmacists pay their tax through salary deductions and the pay as you earn (PAYE) system. Many pharmacy contractors use locums to provide ad hoc cover for the duties of employed pharmacists. Locums may be working ‘off-payroll’, either as self-employed individuals or through personal service companies they’ve set up and, currently, they are responsible for determining the employment status of their engagement.
Changes to the IR35 regulations
The Chancellor announced reforms to the IR35 regulations in 2018 to increase compliance and bring the private sector into alignment with the public sector. From April 2020, medium and large businesses (companies employing more than 50 people) will become responsible for assigning the tax status of locums contracted through their own limited company, to reflect the correct employment status position. Read the consultation document here and our full consultation response here.
About the Company Chemists’ Association (CCA)
Established in 1898, the CCA is the trade association for large pharmacy operators in England, Scotland and Wales. Our membership own and operate over 6,000 pharmacies, which represents nearly half the market. Our members deliver a broad range of healthcare and wellbeing services, from a variety of locations and settings, as well as dispensing almost 500 million NHS prescription items every year. The CCA represents the interests of its members and brings together their unique skills, knowledge and scale for the benefit of community pharmacy, the NHS, patients and the public. Our vision is that everyone, everywhere, can benefit from world class healthcare and wellbeing services provided by their community pharmacy.
About the National Pharmacy
The NPA is the body which represents the vast majority of independent community pharmacy owners in the UK. We count amongst our members independent regional chains through to single-handed independent pharmacies. This spread of members, our UK-wide geographical coverage, and our remit for NHS and non-NHS affairs means that we are uniquely representative of the independent community pharmacy sector. In addition to being a representative voice, we provide members with a range of commercial and professional services to help them maintain and improve the health of the communities they serve.
Association of Independent Multiple Pharmacies (AIM)
AIM is a membership organisation representing community pharmacy businesses with multiple pharmacies. Our members represent a significant number of pharmacies across the UK, delivering primary healthcare and advice to their local communities. AIM also engages with politicians, policy makers, the NHS and local government stakeholders to influence decisions about community pharmacy provision, services and remuneration.
Our mission is to put pharmacy at the forefront of healthcare. Our vision is to become the world leader in the safe and effective use of medicines. Since the Society was founded in 1841 we have championed the profession, and are internationally renowned as publishers of medicines information. Our Royal Charter gives us a unique status in pharmacy. We promote pharmacy in the media and government, lead the way in medicines information, and support pharmacists in their education and development.
About Team Locum
Established in 2001, Team Locum Limited is the UK’s largest supplier of locum pharmacists and opticians to the retail sector and provides services to pharmacies and opticians throughout the whole of the UK. Team Locum also supply nursing and care services in and around the West Midlands registered with regulatory bodies such as REC, CQC, West Midlands CCG and FSB. As the leading UK healthcare agency in its field Team Locum Ltd must default to very high standards, Healthcare isn’t like any other type of business it must have the utmost integrity, it must care, and it must possess the required knowledge and experience to provide its service. Our dedicated staff takes care to place the best-trained, most-qualified professionals as quickly as possible. We take pride in representing hardworking, skilled professionals working in various environments. Acting as a voice for them, we build relationships and provide support in a range of work-related issues.
About Locate a Locum
Locate a Locum was founded by pharmacist Jonathon Clarke, with a vision to transform workforce management in the pharmacy industry through innovative software. We have a suite of products to achieve this goal; a booking platform, full workforce scheduling platform (permanent, relief and locum), compliance modules and real time reporting solutions. With a customer base right across the UK, our locum booking platform connects locum pharmacists with available shifts in pharmacies, from large multiples to small independents and with circa 7000 locums on the platform.