Jargon Busting

The services sector in general uses a lot of jargon and we’re no different.  Here’s what we mean when we say…

A contractor: A individual who provides services usually through their own limited company but can be through an umbrella company.

PSC: Personal Services Company, the limited company which one or more individuals provide their services through. 

An interim: an individual, either working via a recruitment agency or on a temporary contract direct with an end client. Often occupying a position within their client’s organisational chart; for example, providing maternity cover.

Fixed Term Contract (FTC): Employment with a specific end date.

IR35: Also known as Intermediaries Legislation is designed to ensure contractors are running real personal service companies or businesses and are not simply disguised employees of their client.

Inside IR35: Contractors operating inside IR35 are considered, for tax purposes, as employees. They will pay a significant amount of tax, often more tax than they’d be liable for if they were on the same amount of gross pay on their client’s payroll as an employee. Contractors operating inside IR35 are likely to pay both the employer and employee National Insurance contribution on their pay.   

Outside IR35: or “IR35 does not apply” means that an individual is operating as a genuine business, not as an employee or pseudo-employee, and therefore operating outside the IR35 rules.  Working outside IR35 can be tax efficient.

SDS: Status Determination Statement, is a document that states the IR35 status of an assignment. The Government tool is used to make this determination: https://www.gov.uk/guidance/check-employment-status-for-tax.

Substantiative: a term often used in the NHS that is interchangeable with “Permanent Employment”.

Umbrella Company: or Umbrella Payroll Company is a limited company that provides payroll services, often for many individuals. Umbrella companies often have overarching business to business contracts with employment agencies for the provision of the services of their employees. Umbrella companies will provide their employees with all the rights associated with full time employment as well as payment to their personal bank account after tax has been deducted. A minority of umbrella companies are associated with dubious legal practices that can include tax avoidance schemes, and sponsorship of individuals where visa requirements stipulate this as a requirement for work in the UK.

CapEx: Capital Expenditure, often used by our clients to pay for projects and programmes of work that are considered outside of their business-as-usual (BAU) working practices. Within the NHS, CapEx spending could be utilised on certain Contracted Out Services (COS) used for non-business activity, under this scheme the NHS body could claim back the VAT spent on this service.

OpEx: Operational expenditure is an on-going cost. For example, staff payroll, product licensing, office rent. Employers may choose to pay for an interim out of this allocation.

PO No: Purchase Order number. These are usually needed on all client invoices to ensure payment. Within the NHS, this is usually mandatory.

Bank: AKA “Staff Bank” is a temporary staffing agency closely associated with an NHS Trust or group of NHS Trusts / Healthcare providers.

IMAS: NHS Interim Management and Support, a temporary staffing agency run buy the NHS that offers management expertise on a short to medium term basis to the NHS.