A number of members in Northern Ireland, who provide counselling services to GP surgeries, have been in touch with us over recent weeks to tell us about concerns that changes to IR35 rules could have an unforeseen impact on their ability to contract for these services.
We've been in dialogue with the Health and Social Care Board (HSCB) to urgently resolve this matter and they've now revised their guidance to address this based on our recommendations.
What is IR35?
IR35 is an anti-tax avoidance measure, known as the off-payroll working rules, introduced by the UK Government in April 2000. These were updated in 2017 to make public sector employers responsible for determining the employment status of individuals providing services via an intermediary, for tax purposes. Its main aim was to target individuals who attempt to avoid paying employee income tax and national insurance contributions (NIC) by supplying their services through an intermediary. In April these rules changed, bringing the private sector in line with the public sector when determining IR35. This means that for private sector organisations the responsibility for determining IR35 eligibility now falls with the end client – or contracting organisation.
However, this does not apply to what HMRC consider to be small companies – which are those that meet two of the following criteria: an annual turnover of less than £10.2 million, a balance sheet of less than £5.1 million and fewer than 50 employees. Where the end client (GP surgery) fits the small company definition, it remains the responsibility of the contractor (counselling service) to determine if the contract falls inside IR35.
From talking to affected members in Northern Ireland, it seems that a communication from HSCB to all GPs has led to some confusion about application of the rules and questions about the status of contractors providing services to GPs, including counsellors. Having checked the rules with a tax specialist we can confirm that GP surgeries who use external contractors to provide counselling services only need to know the IR35 status of the counsellors provided by the contractor; they do not have to employ them directly.
We highlighted this with HSCB and they have now acknowledged that there was some initial confusion about the updated service specification for 2021 to 2022. As a result of our discussions HSCB have now revised the guidance and the FAQs to address this issue. They've also stated that they'll encourage every pactice to continue to contract to provide counselling services for their patients, as well as encouraging new practices to provide this important service.
BACP IR35 support
We’ve developed a dedicated web page to help members understand how the changes to IR35 will impact on your business. It includes a link to the HMRC toolkit which will help determine your eligibility for IR35.
We’re aware that in a small number of cases, confusion over the rules has impacted on service contracts being awarded. Whilst we hope that the changes HSCB have made will resolve any further issues around contracting, we're keen to support members on an ongoing basis to ensure that patients don’t lose out on this vital support. If you're having specific concerns about this impacting your service please contact our Workplace Lead Kris Ambler.
Off-payroll working IR35
Answers to some common questions about how could IR35 could affect you or your business
Promoting the value of counselling with key decision makers across the parliaments and assemblies of the UK
Influencing decision makers
We work with with politicians and decision makers from all four nations to help them understand the positive changes that counselling can make to people's lives.