TC09640 - [2025] UKFTT 01114 (TC)

Fecha: 13-Jun-2025

Conclusions

Postscript on the forbidden section

164.

As set out above we determined that the non-public and non-parliamentary materials should not form part of our determination of the appeal. However, we allowed HMRC to take us through them de bene esse.

165.

We consider that the documents to which we were referred generally support our conclusion in the following regards:

(1)

In an opinion dated 24 May 1977 HMRC’s solicitor’s office advised on the taxation of deputising services. The background to the note confirms our assessment of the provisions of NHSGMPSR as requiring that the GP using deputising services is “responsible for their own acts and for the acts of the deputising doctors who provide medical services to the GP’s patients” and that the deputising doctors are required to be covered by the medical indemnity insurance. The deputising doctors are noted as required to provide themselves with basic medical instruments, but larger equipment and consumables are provided by the practice to whom the deputy is provided. As such we can see no relevant or material difference between the services provided by a deputising service and those assessed in Mainpay. A deputising service supplies staff not medical care.

(2)

In the request for a legal opinion dated 14 August 1978 it is noted that “since the inception of VAT we have regarded Group 7 of the Exemption Schedule as including the supply of medical services by a firm which employs persons whose names appear in the statutory registers, roles etc. listed in (a) to (h) of item 1 and items 2 or 3 so long as those persons do in fact provide the services. As bodies corporate cannot be included in any of the statutory medical registers … this interpretation is clearly not in accordance with the law. … We now wish to take the remedial legislative action with the express purpose of formally including within the Group 7 exemption the supply of medical deputising services … provided by the registered etc., employees of legal persons who are unable to be so registered”. This again demonstrates an intention to exempt the supply of persons employed by a deputising service, i.e. the supply of staff.

(3)

At this time locum services were considered to fall within Item 1(a) with any associated agency fee or commission being taxable. It was not considered at that time that locums were provided as a supply of staff.

(4)

In a note dated 5 October 1978 accompanying the first draft of the proposed amendment introducing Item 5 the writer states:

“New items 5 and 6 and note (4) deal with deputising services to doctors. …
Dealing first with the deputising service, it’s impossible to say for certain the supply is a supply to the doctor as opposed to the patient, or vice versa. If there is a supply to only one person, it’s more likely to be the doctor. However, it has been thought convenient to draft items 5 and 6 in terms which contemplate that there are two supplies, one to the doctor of the deputising services and another supply to the patient consisting of the provision of the actual medical services and goods insofar as a supply of deputising services to a doctor may not cover the whole supply which it is desired to exempt.
…
I have assumed that in fact it is only general practitioners who avail themselves of deputising services so that I have not provided that the services to them are exempt only while they are practising such …”

The accompanying draft legislative amendment provided for the following exemption provisions:

“5.
The supply of deputising services.
6.
The supply of services and, in connection with it, the supply of goods which would fall to be exempt under item 1(a) if supplied by a person mentioned therein, when supplied by a person in the course of the supply of deputising services.”

And the following note:

“(4)
in this Group “deputising services” means the provision of a deputy for a person registered in the register of medical practitioners, …”

As can be seen, the exemption in fact adopted was substantially different to that first draft, albeit adopting the same language as the proposed note 4. We observe therefore that, rather than the meaning of a deputising service under the NHSGMPSR, a broader definition was proposed, one which was not limited to GPs but on an assumed basis that it was only GPs that used deputising services. There is no explanation in the documents we were provided with (but which we excluded) which explains the change in drafting. We cannot therefore surmise what led to the change.

166.

We take the view that in the period 1972 to 1979 HMRC were persuaded that an entity employing registered medical professionals and providing them (by way of a supply of staff – certainly as now interpreted in Mainpay)to clients who used the registered medical professionals to provide medical care needed to benefit from exemption. At the time they considered that the extension was required for out of hours GP cover which were considered to be taxable because of the provision of extra services thus distinguishing them from the provision of locums which were considered to be exempt under Item 1. As apparent from the documentation we consider Item 5 was enacted to provide exemption in circumstances where there was a supply of staff or a wider composite supply of services that did not readily meet the requirements of Item 1(a).

167.

The documents which we did not admit demonstrate that this was a policy decision. Whilst HMRC satisfied themselves that the proposed amendment was not ultra vires the directive, that does not make it so. For the reasons stated, we consider that the intention of HMRC and of Parliament when enacting Item 5 was precisely to exempt the provision of staff where those staff were registered medical practitioners assigned to duties under the control of a legal person or entity themselves providing medical care to patients using the staff provided to them. The focus of attention was unquestionably GP out of hours cover but the legislation, as drafted, applied to deputies registered with the GMC generally and was not limited to GPs.

Right to apply for permission to appeal

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

Release date: 16^th SEPTEMBER 2025