I have a client who is likely to exceed the VAT threshold later this year - he supplies his services as a speech therapist via his limited company, but not directly to patients, rather to a clinic. The clinic contracts with and books patients, and my client is one of several independent therapists who can be assigned to the patient.
VAT notice 700/34 'Supply of staff' states:
- this is where staff are not contractually employed by the recipient of the supply, but come under the direction of that person.
- and also adds that 'if your business supplies services to another business but your staff continue to operate under your direction, this is not a supply of staff. It is a supply of those services'
VAT notuce 701/57 'Health professionals' states:
- 'if the business maintains the direction and control of its health professional staff to make a supply of medical care directly to a final consumer, then the business is providing medical services rather than merely a supply of staff. In these circumstances, the business is making an exempt supply of health services '
Sounds fair enough, but how in practice do you decide who maintains the direction and control? what specifics do you look at?
My client is senior and so does not require supervision when seeing patients, so could it be argued he is not being 'maintained and controlled' by the client as far as technical delivery is concerned?
Replies (15)
Please login or register to join the discussion.
Rapid Sequence
Your client's company is making a supply of staff to the clinic, in my view. It is the clinic, using that supply of staff, that is then making the supply of healthcare to the patient.
See the Rapid Sequence decision, here: http://www.bailii.org/uk/cases/UKFTT/TC/2013/TC02826.html
I do not imagine your average anaesthetist is subject to any more control than your client.
I do not think that your argument changes things
And I do not think the VAT notice is particularly helpful.
Rapid Sequence only deals with item 5 of Group 7. I think you are relying on item 1 of the group, which relates to a direct supply of medical care.
I would expect HMRC to argue that the company is making a supply to the clinic. It is not a supply of medical care, but the supply of a person that will provide the necessary medical care required for the clinic to make its supplies to its patients. Paragraph 45 of the Rapid Sequence decision refers.
Rapid Sequence
I accept the decision is in the public domain but HMRC have not, to my knowledge, cited it in respect of other cases of a similar nature. I am aware that this case went to Tribunal was badly presented by the Apellant's representative, was heard without the knowledge of HMRC's healthcare policy branch and those of us involved in it wanted the Appellant to appeal to the UTT but the company had neither the heart or money to do so.
So where does this leave the Rapid Sequence decision? if implemented it would leave many Doctor's and Surgeon's who use personal service Ltd companies registrable for VAT? So by turning a blind eye to the decision HMRC avoid a horrendous hot potato!! So can a taxpayer rely on Rapid Sequence???
A Frankenstein argument
RS was a First Tier case and so arguably means nothing - that's what HMRC tells us when a case is in the taxpayers favour.
If Doctors charge the NHS VAT, we all lose as the NHS is probably not funded to cover this VAT and hospitals cannot recover such VAT. All I can say is, there are numerous examples of exemption continuing after Rapid Sequence because, ultimately, it comes down to this - what is being supplied; is it a medical service or is it just a body. I don't think you can equate a doctor who acts within the control of the GMC with a labourer who is told to shift a few bricks from A to B.
My own personal mantra is that HMRC are, 90% of the time, wrong and look at things with the revenue gain in mind rather than the common sense facts, being that medical care is exempt. Try telling a locum doctor that he is akin to an empty Frankenstein's monster type body (Mr F was a doctor too!) and it is the person engaging him who is the medical bod. He would tell you you were talking nonsense, which is exactly what HMRc are talking. Business as usual, a bit like PNL!!
PSC
Just to say too Shaun, HMRC's notice does say the provision of care through a corporate does not stop it being exempt
5. Exemption for care services performed by suppliers that are not enrolled on a statutory professional register5.1 Can corporate bodies make supplies of health care?
Yes, provided that their medical services are wholly performed by employees who are health professionals.
Update
The OP and respondents may be interested in the CityFresh Services decision, released this morning: http://www.financeandtaxtribunals.gov.uk/judgmentfiles/j8527/TC04548.pdf