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Latest News - New Tax Rules 'could Spark Backlash' For Interims

Friday Sep 14

New tax rules 'could spark backlash' for Interims

New rules on employing interim managers in the NHS risk sparking a backlash from temporary managers who could look elsewhere for work, HSJ has been told. 

In a bid to prevent tax avoidance among highly paid interim managers working across the public sector the Treasury has issued new rules for government departments to stop off-payroll working.

HSJ revealed in June the NHS had 48 off-payroll managers earning daily rates totalling 44,000 at the start of 2012.

Last month NHS chief executive Sir David Nicholson ordered that senior board members and officials with significant financial responsibility should not be employed off-payroll.

In a letter to trusts Sir David said where individuals were paid off-payroll for longer than six months and earned 220 or more a day, they would need to open up their tax arrangements to show they are paying the correct level of contributions.

But the crackdown has led to concerns the majority of interim managers are seen as tax avoiders and could impact on the NHSs ability to recruit to vital senior positions during the transition process before April 2013.

The rule changes could also drive interim managers to switch from their own companies to registering with agencies, increasing the costs to the NHS as organisations have to pay an additional agency fee.

Rob McCargow, managing partner of executive recruitment firm Cadence Partners, said many of the executives he represents resented the tone of the letter from Sir David and the implication of widespread tax avoidance.

He told HSJ: Undoubtedly there has been a small number of people who have been operating in a grey area of compliance and potentially manipulating the system to their benefit but this accounts for a very small number. The overwhelming majority take enormous pride in the value for money and service they offer to NHS clients and the transparent and legitimate way they run their companies.

He said the changes could push some people into other sectors away from the NHS but added many were healthcare specialists and who would do what they need to do.

There is a risk if organisations cant find the specialist skills at short notice that they need during this time of unprecedented change, he said. Those who I represent tell me the issue is about the principle and they feel dissatisfied with this letter and that it unfairly breeds a perception of them as tax avoiders.

One source close to the system said: There are a number of people out there who are working through their own companies with the direct intention and effect of reducing their tax bill.

The revenue [Her Majestys Revenue and Customs] might be interested if it thinks that company is essentially a front for someone who should be self-employed. This could be about the government trying to flush out those individuals.

One anonymous interim manager told HSJ: I have worked for many years as an interim manager. I was required when someone was needed to be fully functional and experienced at the highest level at day one.

I have no annual leave, I work over 10 hours with no NHS Pension, no NHS Blackberry or laptop and no automatic annual increase in pay.

But I decide which client to work with and when to work and where. So I will be creative with my accounts, maximising my profits and minimising my tax bill but always within the law.

Source: www.hsj.co.uk - 5 September 2012

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