In a surprise move, the NHS has decided to reverse its blanket IR35 decision regarding contractors and their working for the organisation.

With the IR35 reforms in the public sector now kicking in, the NHS has admitted an error of judgement regarding workers who have provided services to the organisation through intermediaries.

Before the 6 April date when the changes kicked in, the NHS had advised providers of the forthcoming alterations.

A statement from the NHS read: “On our understanding that many individuals currently providing services to the NHS through intermediaries fall within IR35, we anticipated that providers would need to ensure that all locum, agency and bank staff were subject to PAYE and on payroll for the new financial year.”

However, the NHS has now admitted that this was not accurate, and has therefore issued a revised position.

“The introduction of the rules has made clear that an assessment of whether or not IR35 applies should be carried out in a fact-specific way; that is, it should be applied on a case-by-case basis, rather than by a broader classification of roles,” an official statement said.

The NHS has therefore advised NHS providers and other public authorities to consider whether an individual ‘is self-employed when they determine the application of the IR35 rules’.

“This consideration must be conducted fairly, accurately and take into account all relevant factors, including representations which may be provided by the individual,” the statement reads.

The NHS goes on to outline its expectation that all providers for the organisation will fully comply with these legal obligations, and that all locum, agency and bank staff are taxed appropriately.

This news opens something of a door for contractors who have been working for the NHS, as the organisation has, rather than taken the easy way out, acknowledged the diverse workforce it employs today – including contractors.

The NHS will now likely have a greater consideration for the facts around contractors when it comes to IR35 decisions. Essentially, contractors should be treated in a fairer and more just manner moving forward by the NHS following the recalibration of its position.

Whether other major public sector organisations will follow suit remains to be seen.

Should you want some peace of mind, we offer a full contract review amongst other services to help you prepare for IR35. We’ll give a pass or fail based on the current contract you hold, along with comprehensive comments on how to improve any problem areas.

We also offer IR35 investigation insurance, plus representation from our Head of Tax and resident IR35 expert Andy Vessey ATT should it go to tribunal.

For any further information or advice, please call us on 01163 800 400 or drop us an email. Alternatively, take a look around our Knowledge Hub for more IR35 advice, industry news and contractor guides.