GPs doing out-of-hours shifts ‘being targeted’ by tax inspectors
Exclusive Out-of-hours GP providers are being targeted by HMRC in a crackdown on employment status, with the threat of tax tribunals for some groups, out-of-hours groups have told Pulse.
Urgent Health UK, which represents out-of-hours groups, said that the taxman was ‘actively pursuing’ its members for historic tax liabilities which one group said could amount to a 30% hike in its costs.
It comes as out-of-hours groups are already struggling with high indemnity costs, which is making it hard to recruit, and having to compete with seven-day GP access schemes.
HMRC is questioning whether out-of-hours GPs should be classed as ‘employees’ rather than self-employed.
Self-employed GPs can claim tax relief on certain expenses and may benefit from lower national insurance and pension scheme contributions, while the organisations themselves pay lower National Insurance employer contributions.
But HMRC claims that out-of-hours GPs are claiming to be self-employed when they are de facto employees, because they are subject to the same control and directions from their managers as standard employees.
It has written to a number of doctors working for Bristol out-of-hours group Brisdoc as self-employed doctors to ask if they would be prepared to go to a tax tribunal so the court can determine their employment status.
The executive chairman of Brisdoc, Dr Ray Montague, says they have been visited two times so far by HMRC without committing to a ‘verdict’, which is creating uncertainty.
Dr Montague added: ‘It feels like HMRC is on a mission to prove this is a case, whether a case exists or not. From a legal standpoint, the potential undermining of the primary urgent care sector that could follow from this approach is not their problem, and nor it seems is it anyone else’s.
‘NHS England and commissioners have shown no sign of being willing to share the risk.’
Chief executive of Urgent Health UK Dr John Horrocks said: ’[HMRC] detects that with the extra requirements put on GPs in the work they do, they are moving more and more towards employee status, because there is more control exercised on them in one way or another.’
Dr Simon Abrams, chair of Urgent Health UK, said that HMRC was ‘actively pursuing’ this and that out-of-hours providers stood to face severe financial penalties if their practitioners had been incorrectly labelled for tax purposes.
One out-of-hours provider estimated that it would face a 30% hike in its costs if the self-employed GPs it worked with were re-classified as employed by the organisation, he added.
Dr Abrams said: ’With this sort of rise in costs all OOH providers would be crippled.’
Tax experts confirmed that out-of-hours doctors were facing increasing scrutiny over their tax status, but said that the responsibility for determining their status lay with providers.
Bob Senior, head of medical services at Baker Tilly and chair of the Association of Independent Specialist Medical Accountants, said: ’The out of hours organisation would have to pay 13.8% employers National Insurance contributions on any income over £155 per week.
’That would be a significant cost and I would not be at all surprised if the OOH organisation sought to reduce the rate they pay for the sessions to effectively cover that cost so that they remain cost neutral. That is probably the most significant point for GPs since if that happened they would be seeing a significant pay cut.’
Deborah Wood, a healthcare services partner at accountancy firm Moore and Smalley, said: ’If they have been incorrectly classed as self-employed in the past, HMRC will instruct the OOH organisation to reclassify them as employed and to retrospectively correct the error for earlier years. Significant sums can be involved.’
HMRC has denied that it is specifically targeting doctors, but said it continually worked to ensure that tax status rules were adhered to.
A spokesman for HMRC said: ‘Employment status is never a matter of personal choice and is always dictated by the specific facts. When the employment relationship does not accurately reflect the underlying reality, the wrong tax is paid then we intervene to ensure the rules are applied as intended by Parliament.’