New tax rules impacting on locum recruitment

Young Male Doctor Wearing Protective Headgear and Face Mask --- Image by © Royalty-Free/Corbis

The cap on NHS agency staff along with tax changes for public sector workers employed through intermediaries continues to pose challenges for the healthcare recruitment sector, HB Healthcare Holdings has said after posting a 19% drop in revenue to £31.7m for the year ended 31 March 2018.

The company, which owns DRC Locums and Locumlinx, said new rules implemented in April 2017 which move the onus on payment of taxes to the public sector body or recruitment agency, had had a major impact on the perceived income of workers in the public sector.

‘Many have questioned their continuance of working in the public sector,’ it said. ‘Those that are unable to work in the private sector have questioned the rationale of remaining a locum doctor or nurse and have chosen to take a permanent role in the NHS, others have chosen to return to their country of origin’.

However, it said the challenging landscape had led to competitors falling out of the market and that it plans to take advantage by focusing on organic growth in its nursing and doctor contract division.

Gross profit for the year fell from £8.2m to £6.2m representing 19.5% of turnover against 21.9% in 2017. After administrative expenses of £6.3m (2017; £6.9m), the company reported an EBITDA loss of £111,000 compared to a profit of £1.7m the previous year.

Looking ahead, the directors said the group would continue to focus on organic growth and rigorous cost control measures to improve profitability.

‘The Group is confident that it can increase its market share and develop new service offering for our clients, over the next year,’ they said.