Global law firm Ashurst has advised the Isle of Wight NHS Trust in its successful appeal to the First Tier Tribunal against a decision made by HMRC in relation to the VAT treatment of supplies of locum doctors.
The Isle of Wight NHS Trust successfully argued that such supplies are exempt from VAT under the exemption for the "provision of a deputy for a person registered in the register of medical professionals". HMRC's argued position was that such supplies were taxable as supplies of staff in accordance with their published guidance. In the alternative, they argued that the exemption should be limited to certain specific supplies of locum general practitioners or to cover provided for specifically identified doctors. The Tribunal held that HMRC's arguments were contrary to the plain meaning of the domestic legislation and no conforming construction in line with EU law was available to support HMRC's arguments.
This is a landmark case as it overturns the widely held view that such supplies were taxable as supplies of staff. It will have a significant impact on all NHS trusts (a number of which have submitted appeals stayed behind this case) as well as other organisations involved in supplying or engaging locum doctors. The case also raised interesting issues regarding standing of taxpayers before the Tribunal, admissibility of non-public material in the context of statutory interpretation and the limits of conforming construction of UK VAT legislation with EU law, including post-Brexit.
The Ashurst team was led by partner Sara Mardell and associate Beth Sercombe.
