Are your locums taxed appropriately?

The changes in April 2017 in which the GP practice became responsible for the correct tax treatment of locums does not seem to have changed the position of many locums who still claim to be self employed but on closer examination might be better described as employees of the practice.

One of the reasons for the lack of change is the difficulty in recruiting locums and salaried GPs who have a strong bargaining position when it comes to agreeing their status. There are practices where locums do not want to change their status – regardless of the merits of their claim – and the practice are concerned they will lose the locum completely if they insist.

Much is made of the HMRC Check Employment Status for Tax, but taxation professionals are sceptical of both it’s application and conclusions. Most decisions are based on case law – which is not appropriate to discuss in detail here, but in a recent decision concerning Hermes (the courier company) demonstrates the point: the contract between the driver and Hermes has the substitution clause found in most model self employment contracts:


You are not under an obligation to provide the service personally. Accordingly, you have the unconditional right to nominate a substitute to provide the service on your behalf, at any time for any reason. However, it is your responsibility to ensure that your nominated substitute carries out the service in line with the standards to which you would be subject if you were providing the service.

Should you wish to exercise your right provide a substitute, you should advise us of your substitution in writing or telephone the details to the Company.”

However the judgement on the case challenges the practical application of this clause –

“Eventually Mr XXX conceded that if Hermes became aware that a substitute had a serious criminal conviction their duty of care would require them to refuse to allow the use of the substitute, but he had been prepared to adopt an extreme and implausible position until counsel’s questions made that untenable.”

The point being made here is that it is not enough to have a contract that meets the obligations to prove self-employment, it must to proven by events and actions.

There are of course some basic requirements in a contract which sets out to demonstrate the locum is self employed:

  1. they should not be in receipt of holiday or sick pay
  2. the locum should have some control over their work, use (some of) their own equipment (stethoscope etc)
  3. the locum should be paid for the session and not hourly – being self employed implies the acceptance of risk, where is the risk if the pay is hourly?
  4. substitution – this is a key clause as demonstrated in the case above, and only because it was held as a critical factor in a case of Weight Watchers UK Ltd in which the team leaders were held to be employees and a significant factor was their inability to appoint a substitute

Your accountant will be able to provide a model locum agreement, but it is no guarantee of success if the actual arrangements are different

This article was written by Laurence Slavin, a partner with Ramsay Brown, Chartered Accountants who specialise in the finances of GPs, and who are members of AISMA – the Association of Specialist Medical Accountants. Laurence can be contacted at