HMRC clarifies VAT treatment of locum doctors

The recruitment sector has welcomed the much-needed clarity in HMRC’s latest policy paper about the VAT treatment of locum doctors.

However, the policy outcome has been met with concerns.

GMC-Registered Locum Doctors Exempt from VAT

Since the First-tier Tribunal (FTT) landmark decision in Isle of Wight NHS Trust v HMRC ruled that UK law exempts doctors acting as ‘deputies’ (an exemption that applied whether they’re hired through an agency or not), this has created confusion for recruitment businesses.

Now, HMRC has updated its policy, which confirms that agencies and businesses supplying qualifying locum doctors should stop charging 20% VAT on those services.

Policy Outcome ‘Falls Short’

The Association of Professional Staffing Companies (APSCo) believes that while the policy review outcome provides the clarity that didn’t exist earlier this year, it would’ve preferred a different outcome.

Samantha Hurley, Managing Director at APSCo UK, said, “Members will now have a clearer understanding of the new VAT treatment for locum doctors and can make informed decisions regarding historic VAT claims and the future treatment of qualifying supply.”

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