A foundation trust has set up a company for a group of its consultants in a bid to work around the pensions crisis hitting the NHS, HSJ has learned.

Northumbria Healthcare Foundation Trust said it needed to “think differently” about addressing the issue as it launched a limited liability partnership with its orthopaedics team.

Senior doctors have continued to reduce their additional hours due to pension tax rules, which has in turn had a severe impact on services.

LLP arrangements aim to offer more flexibility to senior clinicians, whereby they work additional hours on top of their programmed activities and, in exchange, receive non-pensionable pay from their employers. An NHS Providers briefing said a “handful” of organisations were assessing this option.

Sir Jim Mackey, chief executive of Northumbria Healthcare FT, told HSJ they had identified groups of their medical staff who were increasingly worried about their pensions during some staff engagement work. They then “came up with some alternatives, some workarounds” which help mitigate the issue.

He said: “I think, fundamentally, just ignoring it, and just not dealing with it, will have a huge impact on services because we’ve got more work than we can cope with. We need to keep our clinical staff [and enable them to be able] to work.

“I think, more importantly, it has altered the psychological contract between medics and the NHS because the deal is different to what they came in on. We’re trying very hard to just make sure that our clinical staff are interested, are happy to work, and are able to do what they need to do.”

The new LLP arrangement, launched this month, is initially designed for the orthopaedics team but could be expanded “if the programme proved successful”.

HSJ asked the trust how the scheme would work specifically and how it aimed to comply with IR35 tax rules, which had been previously highlighted as a potential stumbling block. A further statement said: “While we’re unable to go into specific details of this solution, it is important to highlight this was created and initiated by our clinicians.

“We have sought formal legal advice and are satisfied that it is in compliance with IR35 tax rules. It will also require formal contractual set up as we only have a short-term contract in place currently.”

The news comes as the Office of Tax Simplification, an independent government body, urged the government to review the annual and lifetime allowance mechanisms. A report published earlier this week underlined an “increasing concern” about the current charge, to the point it is “no longer in some doctors’ interests to do additional work”.

A Treasury spokesman said: “We have listened to concerns raised by NHS clinicians about the impact of the tapered annual allowance on their incentives to take on vital work, which is why we are conducting a review of how the annual allowance operates, to support the delivery of services.”