Nature of supply

The taxpayer company supplied locum anaesthetists to NHS hospitals and received fees for the provision based on number of hours worked.

Each doctor was paid by the taxpayer which claimed it provided an exempt supply of services of medical care under VATA 1994 schedule 9 group 7 item 5. HMRC said the supply was taxable as employment agency services.

The First-tier Tribunal said the care was provided by the medical professional. The locum worked under the direction and control of the relevant NHS trust and as far as the patient was concerned received the services of a doctor working under the supervision of the hospital not the taxpayer – which was supplying a service of an employment agency.

Item 5 had to be interpreted in accordance with article 132(1)(c) of the Principle VAT Directive. The taxpayer’s services did not amount to medical care...