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HMRC internal manual

Employment Status Manual

Particular occupations: Local Veterinary Inspectors

Local Veterinary Inspectors (LVIs) are qualified veterinary surgeons. They are appointed by the Department for Environment, Food and Rural Affairs (DEFRA), acting for the Minister, under animal health legislation. The duties of LVIs are numerous and include brucellosis and tuberculosis testing, market inspections, exportation of animals and animal products, and notifiable animal diseases. LVIs are office holders.

Under the payment system used by DEFRA, fees due for LVI work are paid to the veterinary practice to which the Inspector is attached. An Inspector could be the principal of the practice, a partner, or a salaried employee. Because payment is not made to the person carrying out the work normal PAYE deduction would create numerous difficulties.

Generally, LVIs would be able to apply for NT codes (EIM03002). To save offices having to consider individual claims to NT coding, DEFRA have been advised to pay all LVI fees gross, without deduction of PAYE tax. This direction has no effect on the NICs procedures for LVI fees previously agreed between DEFRA and the Department for Work and Pensions.

It follows that all LVI fees should be declared by veterinary practices, and included as a component of turnover in the accounts submitted. Where a veterinary practice employs a salaried assistant, the practice should operate PAYE normally upon all salary payments made. Both DEFRA and British Veterinary Association have been advised of this decision and the need for veterinary practices to declare all LVI payments which they receive.

For NICs purposes, the LVI fees paid by DEFRA to principals or non-salaried partners of the practice are earnings liable for Class 1 NICs. DEFRA is the secondary contributor.