Managing staff absence in January is a frequent challenge for practice managers. Locums are high in demand and short in supply and there’s the added pressure of ensuring that staff costs remain within budget. It can be tempting to hire that quick cash-in-hand locum at an attractive rate, even when supplied through a third party. No tax and no deductions save a lot of money and a lot of administration too.
Hiring staff in this way has its ramifications. Staff who are paying tax, National Insurance, pension contributions, and other deductions begin to wonder why they bother and the animosity and resentment soon creep in. Employee’s salaries are often kept low because their value is being correlated against those who aren’t paying tax. It’s unfair and demoralising. On the other hand, the practice thinks it’s on to a winner. Cheap, uncomplicated labour, what’s not to like? Unless of course, there’s an investigation.
The simplicity of reporting the non-payment of tax through the anonymous government form at https://www.tax.service.gov.uk/shortforms/form/TEH_IRF means that any practice could become subject to an investigation. If this goes ahead, even if the practice is hiring locums through a third party, it will be asked to show that it has performed due diligence in the following areas:
1) Does the agent have a payroll system?
2) What is the agent’s employer PAYE reference number?
3) Will the tax and NI be collected and how will the locum be paid?
4) If someone has declared themselves self-employed, what’s their UTR number?
If there are unpaid taxes and fines, these may be levied on the dental practice and the information may make its way to the GDC, who are not keen on fraud. Let’s also not forget the cost to the public purse. Money collected from taxes is used to fund the NHS, schools, the fire service, the police and the many other services we depend on.