Just what the doctor ordered: VAT exemption for locum doctors confirmed by HMRC

On 15 December 2025, HMRC finally accepted that supplies of locum medical practitioners are exempt.

Those who supply or purchase supplies of registered medical staff (including locum doctors) should now consider making claims to HMRC to recover overpaid VAT.

The four-year cap applies to claims. It is important that claims are made promptly in order not to lose the right to claim VAT overpaid four years ago. At the time of writing, four years ago is squarely within the Covid pandemic (2021-2022), when demand for medical staff would have been unusually high; and the overpaid VAT would therefore also be unusually high four years ago.

HMRC’s historic position of locum medical practitioners

Until now, HMRC has taken the view that the supply of medical professionals is a supply of staff (not of exempt medical services) and that this is a standard rated supply.

As medical professionals are usually required by someone supplying medical care, which is an exempt supply, the purchasers are usually unable to recover all the VAT charged to them. This introduces a VAT cost into the supply chain, when parliament’s general approach was to remove the VAT charge from health care.

The legal framework: VAT exemptions for health and welfare

Group 7, Schedule 9, VAT Act 1994

The relevant parts of the legislation are within Group 7, Schedule 9, VAT Act 1994. This group lists supplies within “Health and Welfare” which are exempt from VAT. Included in the list are:

Item 1
The supply of services consisting of the provision of medical care by a person registered or enrolled in … (a) the register of medical practitioners …
…
Item 5
The provision of a deputy for a person registered in the register of medical practitioners.

Legislative history and parliamentary intent

There was an earlier version of the UK VAT legislation, which was changed in 1979 and the “explanatory note” to the order for change said: “The order extends also the exemption under Group 7 of the Exemption Schedule to include the provision of a deputising service for doctors, and in addition exempts the supply of medical services by persons whose names appear in the statutory register and rolls referred to in the group where such professional services are supplied through a third-party – usually a limited company employing the persons concerned.”

In addition, there was an Explanatory Memorandum which stated: “… new item 5, deals with supplies by organisations providing “deputising services”. A general practitioner is responsible for his patients at all times and these organisations arrange for a doctor’s telephone calls to be answered when he is not available and for the deputy to be provided when necessary. It is desired that such provision of “deputising services” to a doctor should be exempt and the new item 5 exempts such supply.”

The change in HMRC’s interpretation

HMRC had considered that the provision of medical staff (including a locum doctors) was not an exempt supply of medical care (Item 1) and was a supply of staff; and that the supply of medical professionals was a taxable supply of staff which did not fall within Item 5. HMRC stated that “deputy” had a very limited meaning, such as “GP out of hours service”.

The Isle of Wight NHS Trust decision

HMRC’s view was appealed by Isle of Wight NHS Trust [2025] UKFTT 1114 (TC).

To the extent there is a supply of staff (and not supply of medical care), the tribunal rejected the narrowness of HMRC’s interpretation, noting that the legislation had no restrictions in its language which could justify limiting “the provision of a deputy” to “GP out of hours services”.

HMRC has historically resisted exemption when medical professionals are provided, but they have now said that they will not appeal this decision by the Tribunal. HMRC Brief 9 (2025) confirms that further guidance will be released in future.

Extent of the exemption and unanswered questions

It is not clear what is meant by a “deputy for a person registered in the register of medical practitioners”. While this clearly covers what is traditionally described as “locum doctors”, how widely does this apply?

There is no requirement in the legislation for the deputy to be registered in the register of medical practitioners, only that the person they depute for be so registered. It came to light in The Isle of Wight case that parliament expected companies and organisations to be included amongst those who provide a deputising service. Will HMRC accept that, even if the person answering the telephone is not themselves a registered medical practitioner, the supply of that deputising service is exempt?

Questions which remain as to the extent to which the exemption will apply under the legislation. There are different questions as to what HMRC will accept as exempt supplies under their interpretation of the legislation.

VAT recovery and the four-year cap

The urgency for making a claim to HMRC, including the overpaid tax in the VAT return period which ended within the previous four years, is that VAT return periods four years ago fell within the Covid pandemic. Purchasers and suppliers of medical professionals will be keen to make prompt reviews of their overpaid VAT and make prompt submissions of their claims to HMRC before the four-year cap expires.

This is in conflict with the wait for HMRC to state its views.

Taxpayers will decide between either waiting for HMRC’s views and losing pandemic VAT claims, or taking their own view and making immediate claims in order to meet the four-year cap.

The doctor might have ordered plenty of rest over Christmas, but the timing of HMRC’s Brief might push taxpayers into a little extra work before the new year.