VQOTW: Exempt Medical Supplies

My client is a modern multi-GP practice. They are about to enter into a new contract to provide locum services to the local NHS hospital and they are presuming this would be an exempt supply of medical/healthcare. My client is not VAT registered as their services mainly fall under the exemption for medical services. Are they safe to assume this will all be exempt?

The provision of medical care to individuals is exempt for VAT purposes, but does this exemption extend to the provision of services of a locum GP, or other doctors supplied through an agency or similar structure?

As an example, a doctor seeing private patients at a private hospital and charging them directly for the treatment or consultation is an exempt supply, as are most services of an NHS GP practice to its patients.

However, if a medical professional is supplying services to a hospital as a GP or Locum, normally their supply is made to the hospital (the practice will invoice the hospital and not the patient), and it is the hospital entity that will then provide the medical care to the patient. The supply, therefore, is one of staff, which is standard rated for VAT purposes.

Where an agency supplies medical professionals (other than staff eligible for the nursing agencies’ concession), where the medical professional is working under the control and guidance of the hospital, it too is making a taxable supply of staff to that entity; not an exempt supply of healthcare.

HMRC Public Notice 701/57 provides the guidance on medical exemption and in particular, section 6, which explains the subtle nuances of supplying medically trained staff.

It is possible for a practice or agency to supply medical services under a contract where the medical professionals remain under the control of the practice or agency, not under the control of the hospital, and therefore to be making an exempt supply. For example, an agency might be responsible for providing the out-of-hours service and its people have autonomy to run that service. But this is very much dependent upon the contractual and actual position.

The takeaway here is that medical exemption is designed around protecting, maintaining and restoring a person’s health, but the contractual nature of how that is delivered means that the VAT position is not necessarily as simple as it may, at first, seem. We would recommend careful analysis of the contracts before concluding that exemption is appropriate, and this is a service that the VAT Consultancy Team at Croner Taxwise would be happy to quote for.


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VAT Adviser
0844 892 2470

Jason has worked in VAT since 1998 originally specialising in not for profit and government sector, before expanding his knowledgebase across Small and Medium Enterprises, Owner Managed Businesses and large corporates. His previous roles in practice involved both compliance and consultancy and has a particular interest in land and property and charities. Jason is also a member of the VAT Practitioners Group.

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