VAT free locum doctors - FINALLY
Quick read to get you up to speed with the VAT liability of locum doctors
14 Mar 2026
Need a plain english summary of what has happened with the VAT liability of locums as a result of the Isle of Wight NHS case last year? …You’re welcome.
For a number of years, the supply of locum doctors (temporary staff) were standard rated for VAT purposes.
Why does this matter? The NHS (and many private healthcare providers) were not able to recover VAT on these costs, putting a huge additional cost pressure on the delivery of healthcare.
What about all the other locum VAT cases? Over the years there have been many cases challenging the treatment of locum doctors unsuccessfully (for example Rapid Sequence Limited and Mainpay Limited).
Most of those cases were arguing that the provision was one of healthcare services (not staff) and thus should be VAT exempt, but in the Isle of Wight NHS case they challenged a completely different part of the law (a different ‘item’) which says a ‘deputy’ for a ‘person registered in the register of medical practitioners’, should be VAT exempt (item 5, Group 7, Schedule 9 VAT Act 1994 to be exact).
The earlier Rapid Sequence case did in fact argue the exact same point, and the FTT concluded at that time (2012) that it had to interpret the law in a particular way that matches the equivalent EU law on healthcare at the time. Rapid Sequence were unsuccessful, and the supply of locum doctors continued to be liable to VAT at the standard rate.
Finally, a group of NHS appellants led by the Isle of Wight NHS Trust challenged this VAT treatment again in the courts. The FTT disagreed (respectfully) with the earlier Rapid Sequence conclusion, and ruled the supply of locum doctors is VAT exempt (hurrah!)
What does it mean?
NHS bodies and healthcare providers should be working with suppliers of locum doctors to recoup any overcharged VAT within the last 4 years. However, at the same time an adjustment to input tax is likely to be required (as a result of being more partially exempt) .
If you need help – or want to understand more about this case and similar opportunities, please reach out to us here.
