Save content
Have you found this content useful? Use the button above to save it to your profile.

Provision of medical locums - no longer exempt

20th Sep 2013
Save content
Have you found this content useful? Use the button above to save it to your profile.

The Tribunal has released its decision in the case of Rapid Sequence Ltd (http://www.bailii.org/uk/cases/UKFTT/TC/2013/TC02826.html). This is a matter that has been running for many months, and will have a significant impact upon those businesses who provide medical locums.

The company provides medical locums to NHS Trusts. It had relied on the very clear wording of VAT legislation: VAT Act 1994, Sch9, Group 7, Item 5, which reads: "The provision of a deputy for a person registered in the register of medical practitioners or the register of medical practitioners with limited registration." Periodically the company also write to HMRC to confirm that its understanding was correct. The Tribunal decision relates how, where HMRC PN 701/57 was re-worded, the company was told that the provision of s deputy doctor is not exempt, but taxable. Further, HMRC considered that the wording of Item 5 was 'problematic' and 'unfortunate.'

The company therefore appealed.

The Tribunal accepted that the company's services fell within Item 5.

However, the Tribunal decided that the provisions of Item 5 go beyond the exemption for medical care provided in European legislation (Directive 2006/112/EC, art 132(1)(c)). Therefore the company's supplies must be taxable.

This is a disturbing decision, and must be the cause for much concern.

1.  In their comments, Tolley suggests that this is the first case in which HMRC have successfully argued that the EC Directive must override UK legislation to the taxpayer's detriment. (This is a significant legal point, and may well trigger a further Appeal.)

2.  More immediately, businesses providing such services must review their VAT affairs urgently. There are numerous agencies providing medical locums, and many will be seriously affected.

3.  One particular concern is that the legislation, which was extremely clear, created a 'legitimate expectation.' I would therefore seek to challenge any attempt by HMRC to back-date an assessment on a business based on this decision.

4.  Further, we have yet to see a formal HMRC Brief explaining their revised approach to this issue. The decision was actually released in mid-August, giving plenty of time for them do do this.

Tags:

You might also be interested in

Replies (2)

Please login or register to join the discussion.

avatar
By User deleted
20th Sep 2013 18:30

Thanks Les ...

This is total madness!

So the locum companies will be making standard rated supplies, will have to register and can then either reclaim input VAT or go on the FRS and possibly make a profit.

The NHS Trust are presumably expemt,or partially exempt so either the government will make up the shortfall or services will suffer.

Either that or the trust will stat employing locum's on zero hours contracts, with all the RTI, Auto-Enrolment and admin costs that comes with that,Typical left hand not knowing what the right is doing and completey ignoring the big picture!

At the end of the day the only losers will be the patients.

Thanks (0)
chips_at_mattersey
By Les Howard
26th Sep 2013 08:35

Medical professionals trading through limited companies.

Following telephone discussions, a further concern is whether HMRC will challenge those arrangements where medical professionals provide their services to hospitals through limited companies (for which there are good direct tax reasons).

The argument is simply that the company is not providing the medical treatment, rather an employee of the company is doing so. At this point in time, HMRC advice seems to allow such arrangements. It would be helpful for a clear re-statement of their policy, as clarification.

 

Thanks (0)