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When is a supply of staff not a standard-rated supply of staff? Potentially where it is a supply of locum medical practitioners falling within the scope of the VAT exemption under item 5 of VATA 1994 Sch 9 Group 7. The Isle of Wight NHS Trust's success before the FTT provides some clarity around the supply of locum GPs going forwards and, although HMRC has yet to update its guidance, it has not appealed the decision.
In October, we published an article in Tax Journal discussing the case of Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 (TC), in which the FTT found that the VAT exemption applied to 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, and was not limited to specific roles.
Perhaps surprisingly, HMRC has not appealed the decision, but has confirmed in Revenue and Customs brief 9 (2025) that it is reviewing its policy and intends to publish updated guidance in due course. While that guidance is being finalised, it is doubly important that taxpayers treating supplies as exempt maintain thorough records and documentation to evidence the supplies being made, and the basis for concluding that an exemption applies. Taxpayers should also consider whether they have charged output tax on supplies of locum doctors that should have been treated as exempt from VAT; where such supplies were within the last four years it may be possible to claim an adjustment or refund of VAT, which may then need to be refunded to the customer. Taxpayers should also consider the impact on their input tax position and whether additional procedures need to be put in place to reflect partial exemption (or adjustments made to existing partial exemption calculations).
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