Martin Innes - PCA Director and Chief Digital Officer at NHS Grampian

MYTH: Contract healthcare workers are mainly hired through the NHS. 

While there are certainly many healthcare contractors employed as temporary 'bank' staff who are paid directly by the NHS, there are a significant number of professionals working in the NHS who are employed on private contracts.

The pay of these contractors is often managed by outsourced payroll providers, also known as umbrella companies. While there may be some advantages to working as a contractor in healthcare, these workers are not afforded the same protections as those employed directly by the NHS and there are some unscrupulous players in the payroll market. I would advise healthcare contractors paid through one, or more, umbrella companies to check their payslips and tax payments to ensure they remain compliant with tax laws or consult a professional if unsure.

MYTH: It's only the employers, not the contractors, that need to be aware of tax avoidance schemes in the outsourced payroll sector.

Employers do need to be responsible and make sure pay and taxes are aligned with regulations and carry out thorough due diligence on any third-party payroll suppliers they engage, but it is not their sole responsibility. Contractors should also remain vigilant of what they should be earning and what taxes they owe. Individual workers are more likely to notice discrepancies on their payslips, and so should keep an eye out for any unexplained fees or changes in their pay packets that may not have been spotted by their employer. If take-home pay is higher than expected, this is a potential warning sign that all is not above board.

MYTH: The number of contract workers in the healthcare sector is decreasing.

This is very much untrue! If you read my fellow PCA director's article on contracting in the healthcare sector, you'll see how the number of contractors has been rising in recent years, especially during the pandemic. About £3.5 billion was spent on temporary healthcare workers in 2022 in England and Wales, and a large proportion of vacancies are being filled by temps, many of them outsourced contractors. Scotland is also heavily reliant on temporary healthcare contractors, but spend is currently lower.

With such a large number of healthcare workers operating as contractors, ensuring that umbrella companies are managing tax payments correctly is essential. This is what PCA accreditation can guarantee.

MYTH: Fraudulent umbrella companies only target higher-earning healthcare contractors in their tax evasion schemes.

Everyone who works as a contractor within healthcare and is paid by an umbrella company could fall victim to a tax fraud scheme, regardless of their pay level. These schemes are operated by a minority of illegitimate umbrella companies, but all workers should make sure to check their payslips for any unusual activity.

Where the difference lies is that workers on a lower pay-band may be hit harder financially should HMRC charge them for the tax money stolen by a fraudulent firm, and it is in these instances where the harm done by unscrupulous payroll providers is most evident. Strong legislation is needed to tackle tax avoidance in the outsourced payroll sector to prevent contractors from being taken advantage of any further.