TC09640 - [2025] UKFTT 01114 (TC)

We must then ask ourselves whether that linguistic interpretation is at odds with the statutory context and its history. In 1973 when VAT replaced purchase tax on the UK’s accession to the Treaty of Rome, Article 10 of the Second VAT Directive (67/228/EEC) provided that member states may, subject to consultation with the Commission, determine exemptions considered necessary. Item 1 to Group 7 Schedule 5 Finance Act 1972 provided for the exemption of “the supply of services and, in connection with it, supply of goods, by a person registered or involved in… the register of medical practitioners or the register of temporarily registered medical practitioners.” Exemption was also provided for the supplies of services and connected goods by other medical professionals including nurses, dentists etc. Under item 4, the provision of care or medical or surgical treatment and connected goods supplied in any hospital and other institutions was also exempted.

The Sixth VAT Directive was adopted on 17 May 1977. It introduced a more comprehensive framework providing for a uniform basis of exemption across the EU. Article 13A provided for exemptions for certain activities in the public interest. These exemptions included (b) hospital and medical care and closely related activities, (c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the member state, (d) supplies of human organs, blood, and milk, and (e) services supplied by dental technicians in their professional capacity and dental prostheses supplied by dentists and dental technicians.

No amendment was made to the provisions of Group 7 Schedule 5 Finance Act 1972 until the Order was enacted with effect from 2 April 1979.

As set out above, Item 5 and what is now Note 2 were enacted by the Order together with a revision to the language of Item 1(a) (the exemption for those temporarily registered as medical practitioners being replaced by one for those with limited registration). The EN is clear that the Order “extends” exemption under Group 7 to “include” the provision of a deputising service for doctors and additionally extends the exemption where medical services are supplied through a third party.

HMRC invite us to conclude that the reference to “a deputising service for doctors” in the EN, limits the language adopted by Item 5 itself to the provision of deputies engaged in the form of a deputising service for out of hours GP cover. The Appellant contends that such an approach is impermissible as doing so requires us to interpret the Explanatory Note rather than Item 5 itself.

We reject HMRC’s submission in this regard. It is uncontroversial that explanatory notes may be used as an aid to statutory interpretation. PACCAR confirms that explanatory notes play a “secondary role”, that they may “inform the assessment of the overall purpose of the legislation and may also provide assistance to resolve any specific ambiguity in the words used in the provision in that legislation” (see paragraph 42). It is at least implicit therefore, that there needs to be some ambiguity in the legislation before it is necessary to resort to the relevant explanatory notes. Further, as confirmed by the Court of Appeal in R (oao McConnell) v Registrar General for England and Wales [2020] EWCA Civ 559, if there is an inconsistency between the terms of the explanatory note and the language adopted in the legislation, the notes are incapable of altering the true interpretation of the statutory provision (see paragraph 37). Finally, the Court of Appeal has clearly stated in R (oao Kaitey) v Secretary of State for the Home Department [2021] EWCA Civ 1875 that, when undertaking the exercise of statutory interpretation, the courts (and tribunals) should “resist attempts to elevate the Notes to a status where they supplant the language of the legislation itself. This is not least because, as the [explanatory notes] themselves state, they are prepared by the Government in order to assist the reader in understanding the Act but do not form part of the Act and have not been endorsed by Parliament.”

In our view the EN explains that it was necessary to extend the exemption otherwise provided for under Item 1 to include the provision of a deputising service for out of hours GPs. In that context, it may have been the intention of the drafter of the note to wholly or partially import that concept as defined in the NHSGMPSR when preparing the EN. However, the language adopted by Parliament was not that which exempted “a deputising service” (whether that was a provider as per NHSGMPSR or the services provided by such a provider). The language is the provision of a deputy and even under NHSGMPSR a deputy is a wider concept than a deputising service (see paragraph 16 Schedule 1 NHSGMPSR 1972 by way of example).

We consider that had Parliament intended to exempt from VAT only a GP out of hours deputising service and not the provision of a deputy for a registered medical practitioner on the General Medical Council’s (GMC) register generally, it would have used language that made it clear that was its intention. But it did not; the much broader exemption was legislated for, one which exempted the provision of a deputy thereby including, but not limited to, a deputising service; where the deputy was “for” a registered medical practitioner and as such included, but was not limited to, general practitioners.

We consider our view to be supported by the terms of National Health Circular E.C.N. 415: concerning General Medical Practitioners: Deputising Services which appears to set out to explain the NHSGMPSR 1962. It makes plain that the amendments made by NHSGMPSR 1962 did not alter the pre-existing arrangements for out of hours cover provided by partners, assistants, and locums (i.e. those arrangements covered in Schedule 1 paragraphs 8(3)(a)(i) – (iv)). Deputising services were and continued to be a subset of deputy.

We take essentially the same view of the Explanatory Memorandum.

We therefore conclude that there is nothing in the legislative or historical context of the Order which indicates that we should apply anything other than an interpretation based on the ordinary meaning of the language adopted as exempting the supply of any person registered on the register of medical practitioners who then performs the duties of the role of a registered medical practitioner.