IR35 NHS Locum Agreement Template UK
NHS locum contractors operating through a Personal Service Company face significant IR35 exposure, as HMRC frequently scrutinises public sector engagements under Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003. Since April 2017, public sector bodies including NHS trusts became responsible for determining IR35 status, meaning a poorly drafted locum agreement can result in unexpected tax liabilities, backdated National Insurance contributions, and penalties. A robust IR35 NHS Locum Agreement clearly evidences the working relationship, demonstrates genuine substitution rights, limits control by the engager, and documents the mutuality of obligation position — all critical factors in an outside-IR35 determination. Whether you are a locum doctor, nurse, or allied health professional contracting through a PSC, a properly structured agreement is your first line of defence. Generate your compliant IR35 NHS Locum Agreement now.
Generate your IR35 Agreement free →Key clauses in a IR35 Agreement
Right of Substitution
This clause grants the contractor's PSC the genuine right to send a suitably qualified substitute to perform the services, rather than the named individual being personally obligated to attend. Under HMRC's IR35 case law, including Mutua v HMRC, a credible and unrestricted substitution right is one of the strongest indicators of outside-IR35 status.
Control and Direction Limitations
This clause defines the scope of how, when, and where services are delivered, explicitly limiting the NHS trust's right to direct the day-to-day manner in which the contractor works. Excessive control by the engager is a primary factor HMRC uses to determine employment status under Chapter 10 ITEPA 2003, making this clause essential for protecting outside-IR35 determinations.
IR35 Status Determination Record
This clause formally records the Status Determination Statement (SDS) issued by the NHS trust, as required under the off-payroll working rules introduced via Finance Act 2020. Documenting the SDS within the contract ensures both parties have acknowledged the determination and protects the PSC owner in the event of an HMRC compliance check.
Generate your IR35 Agreement in 2 minutes
AI-powered. Jurisdiction-aware. No account required for your first contract.
Generate free →Frequently asked questions
Who is responsible for determining IR35 status on an NHS locum contract?
Since April 2017, public sector engagers including NHS trusts are responsible for determining the IR35 status of contractors they engage, under Chapter 10 of ITEPA 2003. The trust must issue a Status Determination Statement (SDS) to the contractor and any agency in the supply chain. If the trust fails to issue a valid SDS, the tax liability shifts back to the trust itself rather than the contractor's PSC.
Can an NHS locum contractor appeal an inside-IR35 determination?
Yes. Under the off-payroll working rules introduced by Finance Act 2020, contractors have the right to formally dispute an inside-IR35 determination by raising a disagreement with the NHS trust. The trust must respond within 45 days, either confirming or revising the determination, and must provide reasons for its decision. Contractors can also use HMRC's Check Employment Status for Tax (CEST) tool to gather supporting evidence for their position.
Does working through a locum agency affect my IR35 position on an NHS contract?
Yes, the presence of a recruitment agency in the supply chain affects how IR35 tax liabilities are collected but does not change who determines status — that remains the NHS trust's responsibility. If the contractor is deemed inside IR35, the agency sitting closest to the PSC in the chain becomes responsible for deducting income tax and NICs via PAYE before paying the PSC. It is important that the locum agreement clearly identifies all parties in the supply chain to avoid disputed liability under HMRC's off-payroll rules.
The information on this page is for general informational purposes only and does not constitute legal advice. Contracto generates AI-assisted contract templates — they are not a substitute for advice from a qualified solicitor. For high-value or complex engagements, always seek independent legal review.