Changes to VAT treatment of Locum Doctors & other temporary Medical staff

VAT legislation exempts the provision of a deputy for a person registered in the register of medical practitioners. HMRC have applied a narrow interpretation of the exemption saying it only applied to deputising services, like the GP out of hours service. HMRC considered supplies of temporary staff by employment businesses were subject to VAT at 20%.

A recent Tribunal decision, Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 (TC), decided VAT exemption applied more widely than HMRC said. It covered supplies of staff, not just the supply of medical care. It also found that the exemption applied to locum doctors, including those provided by employment businesses.

HMRC have said they will accept the Tribunal decision and will consider claims for VAT overpaid on supplies of locum doctors. Importantly any claims for a refund from HMRC have to be made by the business who made the supply of staff, who charged VAT and paid this to HMRC.

While HMRC will only refund VAT to the person who paid it to them it may be possible to ask suppliers of staff, who have charged VAT on exempt supplies of locum doctors, for a refund. This may well affect medical practices who are unlikely to have been able to reclaim any VAT charged.

Whether or not customers will be able to claim refunds of VAT from their suppliers will depend on the contractual position. Considering whether VAT can be reclaimed may be worthwhile. There is a four year limit for making claims for over paid VAT from HMRC so this will be time limited.

If you would like advice on this issue please do not hesitate to ask your usual Albert Goodman contact or the Albert Goodman VAT Team.