Individuals described as ‘locums’ engaged in the fields of medicine, health care and pharmacy

Revenue eBrief No. 89/20:

Individuals described as ‘locums’ engaged in the fields of medicine, health care and pharmacy


5. Incorporation of Locum Practices

Some locums now operate through a limited company. Typically, in these cases, the intermediary (locum company) enters into a contract to supply the services of theindividual locum. This contract can be either directly with the end-user of the individual locum’s services or via an agency. Revenue has carried out reviews on a number of these companies and has identified issues in the following areas:

5.1 Travel and Subsistence Claims

Travel expenses must be necessarily incurred in the performance of the duties of the employment to be reimbursed tax free. Expenses incurred which merely put an employee in a position to exercise his or her employment are not incurred in theperformanceof the duties of the employment. For example, expenses incurred on travel between an employee’s home and normal place of work are not allowable.

In most cases, the normal place of work of an employee/director of an intermediary (locum company) will be the premises of the intermediary’s client. Travel expenses incurred by a director/employee on the journey from home to the normal place of work (and vice versa) do not qualify for a statutory deduction under Schedule E. These expenses may not be reimbursed free of tax. The fact that an intermediary may undertake a series of short-term contracts does not alter this position. The normal Tax and Duty Manual Part 05-01-205 place of work for each new contract will most likely be the premises of theintermediary’s client.

Tax and Duty Manual Part 05-01-06 (paragraphs 4.2 and 4.9) provides more detailedinformation (including examples) on the tax treatment of reimbursement of expenses of travel and subsistence.

5.2 Other Expenses

Section 81 of the TCA 1997 provides that no sum will be deducted in respect of “any disbursement or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade”. Section 886 of the TCA 1997 obliges a taxpayer to maintain certain records in relation to a business, including records of “all sums of money received and expended in the course of the carrying on or exercisingof a trade, profession or other activity”.

Expenses which are not vouched and are not expended wholly and exclusively for the purposes of the trade will be treated as emoluments of the locum and taxed accordingly.

5.3 Family Wages

Wages paid to family members are an expense of the business. Like all other businessexpenses, a deduction will only be allowable where the expense is incurred “wholly and exclusively” for the purposes of the trade. The amount to be deducted as an expense must actually be paid and must be commensurate with the duties undertaken.

Tax and Duty Manual Part 04-06-23 provides further guidance and examples in relation to the payment of wages to family members.

5.4 VAT

The provision of staff by an intermediary is an activity liable to VAT. VAT should be charged at 23% on turnover once the turnover exceeds or is expected to exceed the relevant annual threshold.

6 Frequently Asked Questions


I run a GP practice and the doctors and/or nurses that I wish to engage to work in my practice have informed me that they do not wish to pay tax via the PAYE system and that they will only work for me if they are engaged as a “self-employed contractor”. What is the Revenue view on this?


If, on examination of the facts, circumstances and evidence of an engagement, the individuals are employees, then they cannot simply ‘opt out’ of paying tax/USC/PRSI under the PAYE system on the remuneration from that engagement. Nor indeed, can the payer of the remuneration opt out of their PAYE/USC/PRSI obligations.

In some instances, individuals or practices may be of the erroneous opinion that they can simply elect or decide that such individuals can be engaged either under a contract of service (i.e. an employee) or under a contract for service (i.e. self-employed). In such cases, it may be useful for both parties to examine the Code of Practice referred to above.