Tax treatment of “locums” in the medical and pharmacy sectors

Client

Our client is a medium-sized retail pharmacist and has 3 full-time staff and a number of locum pharmacists engaged since early 2008.

Background

The Revenue Commissioners had recently issued a briefing document on the tax treatment of “locums” in the medical and pharmacy sectors. Our client was concerned that they weren’t treating the locums correctly for tax purposes.

Our Brief

Our client asked us  to review the nature of the locums’ engagements and to advise them on whether they should be treated as employees or self-employed consultants going forward. We were also asked to advise them on how they should rectify any incorrect treatment in the past.

Specifics of Work

We reviewed the terms of the each locum’s engagement to establish the relationship between the parties. We then formed an opinion as to whether they were an employee or self-employed.

We assisted our client with implementing procedures to ensure the correct treatment for all locums going forward. Where applicable, we provided them with a letter for each locum outlining the reasons for their tax treatment changing.

We calculated the PAYE/ PRSI underpaid and advised our client to make a “self-correction” in respect of the underpayment. As the “self-correction” was made within 12 months of the due date for the 2008 P35 return, our client was able to avoid any penalty on the underpayment. If the error had been discovered during the course of a Revenue audit, our client would have been liable to penalties.