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IR35 has probably been one of the largest and most unpopular changes that the world of healthcare recruitment has seen for many years.

Certainly, when the government altered IR35 tax legislation to include locum and agency staff who work for a public body or recruitment agency it led to a lot of confusion and discourse within the industry and a lot more work and demand on resources for healthcare staffing agencies.

Indeed, healthcare staffing agencies have had to become well versed in IR35 legislation to enable them to decide on a case by case basis who falls inside IR35 and then take on the added responsibility of deducting tax and national insurance of the workers who do. In turn all the extra burden of work has added major administration costs and has once again hit margins. Plus, still many fears that they are not meeting the demands of the ongoing reporting and regulations requirements.

However, things could be about to get much harder for healthcare staffing agencies as a landmark court case could impact healthcare contractors who have already been put on an agency’s payroll after the reforms and could leave agencies inundated with rights claims from contractors.

The disturbing news comes after HMRC contractor Susan Winchester successfully claimed for a 12.07% holiday pay entitlement under the Agency Workers Regulations that deem that as an employee she is entitled to the same rights as employees.

Winchester claimed that as she was forced to join the HMRC payroll, without a right of appeal, then effectively as an agency worker, under the regulations, she was therefore entitled to the same holiday pay and other benefits as other employees of HMRC and others involved in the supply chain, including her staffing agency.

Commenting on the case Contractor Calculator CEO Dave Chaplin said: “This case is a game-changer for public sector contractors who may be eligible for similar substantial pay-outs, having been forced by their public-sector clients into umbrella and agency arrangements following the introduction of the Off-Payroll tax.”

“The agency supply chain is now clearly vulnerable to legal challenges,” continues Chaplin, “having been reminded that it cannot simply shun its responsibilities and force contractors to fund their own employment rights.

“Given the amount of public sector contractors who have been bundled into these types of arrangements, we expect that this settlement will give rise to a number of similar challenges. Inevitably, this will create financial difficulties for the non-compliant intermediaries, which will hopefully help stomp out this malpractice.”

Whether the development has a major impact on the already stretched accounting functions of healthcare staffing agencies is something that we will have to wait and see, however one thing is for sure, it makes it even more necessary for staffing agencies to aim to protect their business value and future proof themselves against the possible risks as much as possible.

However, this isn’t an easy thing to do; there are constant demands to perform with greater accuracy, pace, productivity and effectiveness and for all team members, many of whom do not have the specialised skills necessary, to maintain focus on growing income streams and cutting costs to stay ahead of the growing competition.

Outsource your Accounting Services to a trusted offshore Partner and focus on your core activities

This has created a crucial need for all staffing agencies to have a clear strategy in place to manage these important changes and to guarantee that they can take on any further demands. Many are finding it beneficial to outsource some or all their accounting function’s burden to an expert, experienced Offshore Accounting Services partner with a dedicated healthcare accounting team.

An expert offshore accounting services partner allows the staffing companies to instantly adapt to their client needs, increase productivity and cope with any legislative changes and accounting team pressures.

How is your healthcare staffing agency dealing with these changes?