Following tribunal decision in Isle of Wight NHS Trust case, HMRC revises policy to clarify NHS Trusts and private health providers should have been exempt from VAT on locum doctors fees and should be able to can claim overpaid output tax for last four years
The Isle of Wight NHS Trust appeal at the First Tier Tribunal (FTT) was a lead case and the decision affected 13 other NHS trusts. The tribunal found in favour of the NHS Trust that the supply of locum doctors who performed the duties of a registered medical practitioner was exempt from VAT. As a result, the NHS Trust was incorrectly charged VAT on the supply of doctors.
At the tribunal, HMRC had argued that the supply of locums ‘was not a supply meeting the terms of the exemption provided under Item 5, Group 7, Schedule 9, Value Added Tax 1994 (VATA) (Item 5)’. But the tribunal rejected this argument in what was described as a ‘fractious’ case.
The FTT ruling released in September forced HMRC to revisit the current policy and on 15 December, HMRC issued an update on the VAT treatment of the supply of temporary medical staff, including locum doctors.
