IR35 or Intermediaries Legislation is the tax and National Insurance legislation that may apply if a worker is working for a client through an intermediary.
The legislation is designed to identify ‘disguised employment’ and tax anyone working as a ‘disguised employee’ at similar rates to normal employment. It looks at the underlying relationship between the worker and the client for each engagement.
A Limited Company could be considered to be an intermediary, so if a worker (Locum GP) is working through an intermediary (Limited Company) it is important for both the client (Practice) and intermediary (Locum’s Limited Company) to consider whether the engagement falls under IR35 legislation. The conditions of liability for a Limited Company can be found here.
If you are working through a liable intermediary, it is the intermediary’s responsibility to ensure compliance with IR35 legislation. The intermediary also needs to determine whether IR35 applies for each of the worker’s engagements.
The client must also consider the worker’s employment status to ensure they fulfil any tax and NI contribution liabilities of their own.
Some of the factors that HMRC will look at when considering whether IR35 is applicable to the engagement are Control, Financial Risk, Substitution, Provision of equipment, Right of dismissal and Employee benefits amongst others.
Locum GPs may choose to work through Limited Companies to make use of certain tax and NI efficiencies, but it is important to for both the Locum GP and Practice to consider the IR35 implications and ensure that all potential HMRC liabilities are reported and settled.
More information about IR35 can be found on the Government's website here.