VAT update for GP practices: reclaiming VAT on locum doctor services
A recent Tribunal decision, now accepted by HMRC, confirms that many locum doctor services supplied via agencies should be VAT exempt – potentially creating reclaim opportunities for GP practices that have historically been charged VAT.
What has changed?
A recent First-tier Tribunal ruling has confirmed that the supply of locum doctors – whether arranged directly or through an agency – falls within the VAT exemption for the “provision of a deputy for a registered medical practitioner.”
HMRC has accepted this decision and confirmed it will not appeal.
This means:
- Many locum agencies should not have been charging VAT on GP locum services
- GP practices may have incurred VAT unnecessarily on these supplies
Can GP practices reclaim the VAT?
There is an important distinction:
- Only the supplying agency can reclaim overdeclared VAT from HMRC
- GP practices cannot reclaim this VAT directly
However, HMRC has also confirmed that agencies must not be “unjustly enriched”. As such, any VAT refunded to the agency should ultimately be passed back to the organisation that bore the cost – in this case, the GP practice.
What your practice should do now
1. Check current invoices
- Review recent locum invoices to confirm that VAT is no longer being charged on the labour element of the supply – VAT may still be correctly charged on the service fee and this is not reclaimable.
- If VAT still appears, contact the agency and:
- Ask them to confirm their treatment, and
- Request an explanation in light of HMRC’s updated position
2. Review historic invoices and request repayment
HMRC’s time limits mean reclaims are typically restricted to the last four years.
If your practice has been charged VAT on locum services within this period:
- Contact the relevant locum agencies
- Ask whether they plan to submit a reclaim to HMRC
- Request that any VAT recovered is repaid to your practice, in line with unjust enrichment rules
Agencies may require copies of historic invoices, so it’s advisable to gather these in advance.
We’re here to help
This change presents a potential opportunity to recover historic VAT costs, but the process requires coordination with agencies and careful review of past invoices.
If you would like support with reviewing historic locum invoices, identifying where VAT has been incorrectly applied or engaging with agencies on recovery, get in touch with our specialist medical team today.
