First Tier VAT Tribunal says Locum Doctor Supplies are VAT Exempt
Bruno Gomes · Posted on: October 17th 2025 · read
In a recent decision, the UK First Tier Tribunal (FTT) sided with the Isle of Wight NHS Trust, confirming that the supply of locum doctors—even when provided via agencies—qualifies for VAT exemption under Item 5, Group 7, Schedule 9 of the VAT Act 1994.
Why this matters
Historically, HMRC maintained that such supplies were standard rated, arguing they constituted a supply of staff, not medical services. This position was supported by earlier cases such as Mainpay Ltd v HMRC and Rapid Sequence Ltd v HMRC, where tribunals ruled that agency-supplied doctors were under the control of NHS Trusts and thus VATable.
However, the Isle of Wight case challenged this interpretation. The Tribunal found that the Trust had been supplied with registered medical practitioners acting as deputies, and that this fell squarely within the scope of Item 5 exemption. The decision was bolstered by historical legislative context and documentation, which clarified that the exemption was intended to cover deputising services, not just direct employment. Moreover, such deputising services may relate to other medical fields and not just GPs.
Implications for the Sector
We are waiting to find out if HMRC decide to appeal this decision. Please contact your usual VAT advisor or Bruno Gomes for more information.
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