Locum Doctor supplies now VAT exempt – A game-changer for healthcare providers
Bruno Gomes · Posted on: October 6th 2025 · read
In a pivotal decision delivered on 16 September 2025, 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
This decision opens the door for NHS Trusts, private hospitals, care homes, schools with medical staff, and charities offering healthcare services to reclaim VAT previously charged on locum doctor supplies. Should the FTT’s decision be accepted by HMRC, or should HMRC be unsuccessful in an eventual appeal, the potential financial impact is substantial, with estimates suggesting millions in recoverable VAT across the sector.
How the MHA VAT experts can help
The MHA VAT team, led by specialists, is already advising clients on how to maximise this opportunity. Whether you're an NHS Trust, private hospital, or care provider, our team can:
Assess your eligibility.
Liaise with suppliers/agencies who charged you VAT.
Prepare and submit claims (on behalf of the suppliers/agencies).
Ensure compliance and maximise recovery.
Get in touch with us today to discuss your position and start your claim.
