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Off-payroll legislation was rolled out into the private sector in 2021 — and threw the whole area of flexible working into turmoil.
For community pharmacy, it has meant that the hiring pharmacies have become responsible for assessing the employment status of their locum pharmacists. As a result, some pharmacies took the decision to blanket ban locums from working through their own limited companies, which nudged many of them into working through umbrella companies for the first time.
One effect of the legislation was a rise in the number of companies entering the market purporting to be umbrella companies but are in fact tax avoidance and disguised remuneration schemes, duping unwitting workers into signing up with them with the promise of more takehome pay.
What does a compliant umbrella company offer?
Including all statutory rights and benefits such as holiday pay, maternity, paternity, sick leave, pension.
While working on a contingent basis (useful for access to finance, housing/mortgages).
- Locums perform multiple assignments
- Umbrellas consolidate their workers’ earnings and ensure the right taxes are paid.
With no need to submit an annual selfassessment return to HMRC
In the unlikely event that an individual needs HR advice, such as in a grievance case, as their employer, the umbrella firm, will have processes to support them.
Advice for locum pharmacists
This is a simple online process at gov.uk/ personal-tax-account. With a personal tax account, a worker can check that the earnings reported on their payslips are the same as those reported to HMRC.
Check the payslip and the details of the income the umbrella has received from the agency. Typically, this shows the number of units worked, either hours or days depending on the rate, the rate paid for each of these units and the total received. This should align with the timesheet that has been authorised. So if, say, a locum has worked five days and the umbrella receives £300 per day as the agreed rate, then the total received should show as £1,500.
Check any deductions made by the umbrella. If anything seems strange or too high, have it checked. If there is a line for a loan or advance deduction, alarm bells should ring.
The total received, less company deductions, should equate to the total gross taxable income on the payslip element of the report. Each contractor has their own tax and NI deducted, and possibly any pension contributions being made. This will show the take-home pay that will be paid into the assigned bank account.
If the amount received into that account is different, usually more than shown on the payslip, it is likely a contractor is in a disguised remuneration scheme.
We are seeing increasing instances where employees and workers receive text notifications outlining what they will be paid. These do not replace the requirement for payslips. A text message is not a payslip, is illegal and could be concealing the income being reported. A personal tax account will highlight any discrepancies.
Important advice for community pharmacies
It is vital that pharmacies know that their recruitment partners and the umbrella firms that they may work with will stand up to rigorous interrogation and investigation.
You can start by checking out your recruiters. Are they in a good financial position? At the very least you should be running a credit check and you should also investigate their accounts – if independently audited then you can feel reassured that the figures are true. You should also check for issues such as conflicting business interests, previously failed businesses, financial difficulties and offshore connections.
You will also want to check their contracts of employment (umbrella), insurances and levels of cover. Ask to see a copy of their insurance certificates, VAT certificates and certificate of incorporation. Ask your recruiters to confirm the names of the intermediaries they work with and run similar checks on these. Such an audit will identify a high-risk provider who is more likely to be a disguised remuneration scheme.
Ignorance is no defence
Disguised remuneration schemes have been well documented and publicised, and HMRC is likely to use all its powers to penalise those individuals identified using such schemes.
If you suspect something is not right: Challenge it. Get out of it. Report it.
• Crawford Temple is chief executive officer of Professional Passport, an independent assessor of payment intermediary compliance
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