Policy paper

VAT liability of the supply of temporary medical staff

Published 15 December 2025

Purpose of the brief

This brief provides an update on the VAT treatment of the supply of temporary medical staff (locum doctors).

This follows the First Tier Tribunal decision in Isle of Wight NHS Trust and others.

It also provides guidance for anyone who wants to claim a refund of overdeclared output tax following the decision.

Who should read this

You should read this brief if you’re:

• an NHS body
• a private healthcare provider
• an employment business supplying locum doctors
• a VAT adviser

Background

Under Item 5, Group 7, Schedule 9, VAT Act 1994, “The provision of a deputy for a person registered in the register of medical practitioners,” is exempt from VAT.

HMRC’s position has been that this exemption is restricted to the supply of deputising services, like the GP out of hours service. HMRC considers supplies of temporary staff by employment businesses as taxable supplies of staff, at the standard rate of VAT.

The First Tier Tribunal in Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 (TC) disagreed with HMRC’s position.

It found that the VAT exemption applied to supplies of staff, not just the supply of medical care. It also found that the exemption applied to locum doctors, including those provided by employment businesses and was therefore not limited to out of hours GP cover.

HMRC has not appealed against this decision. We are now reviewing our policy in this area and will publish updated guidance in due course.

How to claim a refund of overdeclared output tax

You may be able to claim a refund, if all the following apply:

• you’ve made a supply of locum doctors
• you’ve charged output tax at the standard rate
• you now consider this should have been exempt from VAT
• this was within the last 4 years

Only the person who made the supply of staff and charged output tax can claim a refund.

Depending on the amount of overdeclared output tax, you can either:

• adjust your return for the period in which you discover the overdeclared tax
• claim a refund by making an error correction notification

HMRC will not pay a claim which would result in your unjust enrichment.

Error correction notifications

To make an error correction notification, you’ll need to:

1. Complete form VAT652 —Notification of errors in VAT Returns.

2. Send the completed form by email, to: ccg.locumdoctorsclaim@hmrc.gov.uk.

3. Put ‘Locum doctors claim RCB 9/25’ in the subject line of your email.

Make sure you:

• set out the basis of, and the reason for, the claim
• show the amount being claimed
• show how that amount has been calculated
• break the amount down by reference to prescribed accounting periods
• can provide copies of documentation used in the calculation of the claim on request

Possible effect on recovered input tax

These supplies would previously have been treated as taxable supplies, but are now treated as exempt. This means you’ll need to consider the impact on associated input tax that you’ve recovered on previous VAT returns.

This includes considering how the rules on partial exemption may affect you. You’ll need to make the appropriate adjustments to your claim, as you can only claim for the net amount.

More information

You can find more information in How to correct VAT errors and make adjustments or claims (VAT Notice 700/45). In particular:

• section 4: Correcting VAT errors on a return already submitted
• section 5: How to claim a refund
• section 9: Unjust enrichment and the reimbursement scheme

You can find more information on partial exemption in Partial exemption (VAT Notice 706).