Community pharmacy sector concerned about new tax proposals

The Royal Pharmaceutical Society, the Company Chemists’ Association (CCA), the National Pharmacy Association (NPA), the Association of Independent Multiple Pharmacies (AIM), 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.