New guidance on VAT treatment of supplies of medical staff

As reported by ICAEW

HMRC has updated its position on the VAT treatment of the supply of temporary medical staff (locum doctors), and explained how businesses can claim a refund of overpaid VAT, in Revenue and Customs Brief 9 (2025).

HMRC has published the brief in response to the decision of the First-tier Tribunal (FTT) in Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 (TC). This was a lead case for 20 other appeals. 

VAT exemption and supplies of medical staff  

The Isle of Wight NHS Trust had appealed against HMRC’s decision that the supply of locum doctors was not within the VAT exemption under Item 5, Group 7, Schedule 9, Value Added Tax Act 1994 for “The provision of a deputy for a person registered in the register of medical practitioners”. HMRC had taken the view that the exemption was restricted to traditional deputising services (such as GP out-of-hours cover) involving the replacement of a specific named doctor. They argued it did not extend to the routine supply of locum staff, to fill vacancies for example, which was taxable at the standard rate. 

The FTT rejected HMRC’s interpretation and ruled that the VAT exemption applies to supplies of medical practitioners as deputies, even when supplied as temporary staff. Crucially, the FTT found that a medical practitioner provided to fill a designated role or vacant post that would normally be held by a registered doctor is supplied as a deputy. HMRC has not appealed against the FTT’s decision and is currently reviewing its policy, with detailed guidance to be published in due course.  

Claiming a refund of VAT 

Businesses may be able to claim a refund of VAT where they charged output tax at the standard rate on the supply of locum doctors within the last four years and now consider that the supply should have been exempt from VAT. 

Depending on the amount of the overdeclared output tax, the business can either: 

• adjust their VAT return for the period in which they discover the overdeclared tax; or

• claim a refund by making an error correction notification. To do this, the business should:

  • complete form VAT652, providing the information and explanations set out in the brief; and

  • email the completed form to ccg.locumdoctorsclaim@hmrc.gov.uk, putting ‘Locum doctors claim RCB 9/25’ in the subject line of the email. 

Where supplies that were previously treated as taxable are now treated as exempt, this could impact on associated input tax recovered on previous VAT returns. HMRC is asking businesses to consider this when claiming a refund and to ensure they claim for the net amount.