VATHLT2085 - Doctors: Caselaw Relating to the Liability of Locums

The issue of control was a fundamental argument in the FTT case Rapid Sequence Limited [2013] UKFTT 432 (TC). Rapid Sequence provided the services of overseas-based anaesthetists to hospitals in the NHS as locums and received fees for their services based on the number of hours they worked HMRC’s position was that in this case the supply was not one of exempt medical services, but rather a standard-rated taxable supply of services, which the decision refers to as “employment agency services”. The FtT found that the company was making supplies of staff, as it had no control over the work carried out by its locum doctors, who worked under the ‘direction and control’ of staff at the NHS Trusts they were supplied to.

A similar decision was reached by the FTT in Mainpay Limited [2020] UKFTT 204 (TC). Mainpay supplied doctors to an employment agency who in turn supplied them to NHS Trusts. The key issue was the direction and control of the doctors. The FTT found that Mainpay did not have control over clinical decisions, and the doctors were under the control, direction and supervision of the NHS Trusts and operated within the framework of the NHS Trusts.

115. Based on the evidence as a whole, including the contractual arrangements and the circumstances in which consultants worked, we are satisfied that throughout the Relevant Period consultants were under the control, direction and supervision of the NHS Trusts and operated within the framework of the NHS Trusts. They effectively became part and parcel of the organisations of the NHS Trusts which were themselves providing medical care to patients.

119…. In our view the question is not whether there is a transfer of control over clinical decision making, but over the way in which the consultant works. In cases such as this, operational control is more important than it might be in other cases. In particular, control over when, where and what work the consultant carries out. In our view the consultants engaged by Mainpay carried out their work within the framework of the NHS Trust, in the sense that they operated within the remit of local policies laid down by the NHS Trust. Mainpay’s consultants were incorporated into the organisation of the NHS Trust in the same way as a consultant who might have been employed directly by the NHS Trust…Based on the evidence as a whole we regard the essence of the supply as being that of staff, rather than medical services.

In Archus Trading Ltd TC/2018/04765 the issue of control was again the fundamental aspect. Archus supplied medical services to prisoners in Scottish prisons, via a contract with the Ayrshire and Arran Health Board. HMRC argued that this was a taxable supply of staff because Archus was providing its services to a health board and not directly to the patient. The FtT found that the Health Board can fulfil its legal obligation by providing the medical service itself or by arranging for someone else to provide the medical care.

The direction and control of the doctors rested at all material times with Archus and not with the Board; the Board exercised no control in how Archus delivered medical care in the prison.

A similar decision was reached in Medacy Ltd TC2018/01569. Medacy supplied clinical pharmacists to GP surgeries. HMRC’s position was that this was a supply of staff as the direction and control rested with the surgery. The FtT found that the company was making exempt supplies of medical care under Item 3 of Group 7, Schedule 9. The facts found by the Tribunal show the degree of control that the company has over the pharmacists it employs and the level of involvement it has in the services it agrees to supply to the GP practices, both at the start and ongoing.

In particular, Medacy negotiated and agreed bespoke services with the GP practices (subject to key performance indicators); issued protocols for the pharmacists; carried out regular reviews of the services; had its own medical malpractice insurance covering the activities of the pharmacists; had responsibility for the clinical decisions taken by its pharmacists; had a senior team overseeing the activities (including a Senior Pharmacist); provided help and support to the pharmacists, and had input into how the pharmacists structured their day and how the tasks were undertaken and completed.

In Sally Moher at Premier Dental Agency UKUT 260 (TCC) the Upper Tribunal placed emphasis partly upon the contract, and partly upon the in-the-round assessment. Moher, an employment agency, supplied temporary and auxiliary staff to dentists without controlling their functions, which the FtT found to be a supply of staff rather than a supply of medical care. The Upper Tribunal found there to be no other rational conclusion possible, regardless of whether the staff were in the employment of the agency:

14. it is difficult to see how one could rationally conclude that the appellant was making supplies of medical care, once it is accepted that the nurses and auxiliaries were under the control of the dentist to whom they were assigned. ……. The appellant did not control – or even know – whether, and if so, the extent to which, the dentist directed a nurse or auxiliary to carry out other duties which themselves were not exempt supplies, such as acting as receptionist or assisting with cosmetic dentistry. Even in relation to dental services which were exempt, the appellant did not dictate the treatment offered to the patients or play any part at all in determining what treatment was offered or how it was provided, nor did she supervise the nurses and auxiliaries…. It is in our view beyond argument that her supply was of staff to dentists, who (as the tribunal found) assumed all the responsibility for directing the nurses as to what they should do, and for determining the treatment to be offered to the patients and the manner of its delivery.’