The VAT liability of medical staff can be difficult to determine, particularly where healthcare providers use temporary staff, locum doctors or employment businesses. The correct VAT treatment depends on how the supply is structured, who is being supplied, and whether the work falls within the relevant healthcare VAT exemption.

Following HMRC Revenue and Customs Brief 6 (2026), healthcare providers, employment businesses and agencies should review how VAT is being applied to supplies of temporary medical staff. The brief confirms HMRC’s updated position on the VAT liability of supplies of GMC-registered locum doctors and may affect both current invoicing and historic VAT treatment.

In this guide, we explain HMRC’s current position, which medical staff supplies may be exempt from VAT, what this means for healthcare providers and employment businesses, and how The VAT People can help assess the correct VAT treatment.

What has HMRC announced?

HMRC Revenue and Customs Brief 6 (2026) sets out HMRC’s revised position on the VAT treatment of supplies of temporary medical staff, specifically GMC-registered locum doctors.

The update follows the First-tier Tribunal decision in Isle of Wight NHS Foundation Trust v HMRC. HMRC now accepts that, while the current legislation remains in place, supplies of GMC-registered locum doctors may fall within the VAT exemption for the provision of a deputy for a person registered in the register of medical practitioners.

This means that certain supplies of locum doctors, including some supplies made through employment businesses, may be exempt from VAT where the conditions are met.

Who is affected by the updated guidance?

The updated position is relevant to organisations involved in the supply or use of temporary medical staff, including:

• NHS bodies
• Private hospitals
• Clinics and healthcare providers
• Employment businesses supplying locum doctors
• Medical staffing agencies
• Finance and VAT teams in healthcare organisations
• VAT advisers working with healthcare providers or staffing suppliers

The guidance is particularly important where VAT has historically been charged on locum doctor supplies, or where suppliers and customers are unsure whether VAT should continue to be charged.

What is HMRC’s current position on locum doctors?

HMRC now accepts that supplies of GMC-registered locum doctors may be exempt from VAT where the relevant exemption conditions are met.

The key points are:

• The individual supplied must be registered with the General Medical Council (GMC).
• The role must be one that requires a registered medical practitioner.
• The supply must be properly characterised as the provision of a locum doctor, rather than a general staffing supply.
• The exemption may apply even where the supply is made through an employment business.

This does not mean that every supply of temporary medical staff is exempt from VAT. The exemption is specific and must be assessed carefully against the facts of each arrangement.

What does the exemption cover?

The exemption relates to the provision of a deputy for a person registered in the register of medical practitioners. In practical terms, this can include the supply of a GMC-registered locum doctor who is undertaking medical work that would otherwise be carried out by a registered doctor.

For the exemption to apply, it is not enough that the person works in a healthcare setting. The role must require a registered medical practitioner, and the supply must fall within the scope of the exemption.

This distinction is important because many healthcare staffing arrangements involve a broader supply of labour. Where the supply is not one of a GMC-registered locum doctor acting in the relevant capacity, VAT may still be due.

What supplies are not covered?

HMRC’s updated position is limited to GMC-registered locum doctors where the relevant conditions are met. It does not automatically extend to all healthcare workers or all temporary medical staffing arrangements.

The exemption will not usually apply to:

• General temporary staffing services
• Administrative or non-clinical staff
• Non-GMC-registered workers
• Allied health professionals
• Physician associates
• Anaesthesia associates
• Nurses, unless another exemption applies
• Healthcare assistants
• General agency staffing arrangements that do not meet the specific conditions

Suppliers should therefore avoid applying the exemption too widely. Each supply should be reviewed by reference to the individual being supplied, the role being performed and the contractual arrangements in place.

What does this mean for healthcare providers?

Healthcare providers using temporary medical staff should review whether VAT is being correctly charged on locum doctor supplies. This applies to both current and historic arrangements.

Private hospitals, clinics and other providers may need to consider:

• Whether invoices from employment businesses include VAT
• Whether the supplied individuals are GMC-registered locum doctors
• Whether the role requires a registered medical practitioner
• Whether the VAT treatment has changed following HMRC’s updated position
• Whether any VAT previously charged may need to be reviewed
• Whether input VAT recovery has been affected

For healthcare providers that are partly exempt, the position may be more complex. If a supply is treated as exempt rather than taxable, this may affect VAT recovery and wider partial exemption calculations.

What does this mean for employment businesses and agencies?

Employment businesses and medical staffing agencies supplying locum doctors should review whether they should charge VAT on relevant supplies.

This may involve checking:

• Whether the worker supplied is registered with the GMC
• Whether the role requires a registered medical practitioner
• Whether the contractual arrangements support the exemption
• Whether invoices have historically been raised with VAT
• Whether VAT returns may need correcting
• Whether any refund claim is available
• Whether partial exemption adjustments are required

Agencies should also review how they describe supplies in contracts, invoices and supporting records. Clear documentation can be important if HMRC later asks why exemption was applied.

Can businesses claim back overdeclared VAT?

Where VAT has previously been charged on supplies that should now be treated as exempt, a supplier may be able to submit a claim for overdeclared output tax.

In broad terms, a claim may be possible where:

• VAT was charged at the standard rate
• The supply is now considered exempt under HMRC’s revised position
• The claim relates to supplies made within the relevant four-year time limit
• The supplier has sufficient evidence to support the correction

However, refund claims need to be approached carefully. HMRC may consider whether repayment would result in unjust enrichment, particularly where the VAT cost was passed on to the customer.

What is unjust enrichment?

Unjust enrichment can arise where a supplier claims a VAT refund from HMRC but does not reimburse the customer that originally bore the VAT cost.

For example, if an employment business charged VAT to a healthcare provider and the healthcare provider paid that VAT, HMRC may consider whether refunding the supplier would create an unfair benefit unless the customer is reimbursed.

Businesses considering refund claims should therefore review the commercial position, customer contracts and historic invoicing arrangements before submitting a claim.

How could partial exemption be affected?

Where supplies previously treated as taxable are now treated as exempt, input VAT recovery may be affected.

This is particularly relevant for employment businesses and agencies that have recovered input VAT on costs linked to supplies of locum doctors. If those supplies are now exempt, the business may need to review whether input VAT was recoverable in full.

This may involve:

• Reviewing input VAT previously claimed
• Considering whether costs are directly linked to exempt supplies
• Reviewing residual input VAT and overheads
• Updating partial exemption calculations
• Calculating any net amount due to or from HMRC

A refund claim may therefore not equal the full amount of VAT previously charged. Any claim should be calculated after considering the impact on input VAT recovery.

What records should be reviewed?

Healthcare providers, employment businesses and agencies should review relevant records before changing VAT treatment or submitting a claim.

This may include:

• Staffing contracts
• Agency agreements
• Customer invoices
• Supplier invoices
• VAT returns
• Assignment records
• Timesheets
• Role descriptions
• Evidence of GMC registration
• Internal VAT treatment notes
• Partial exemption calculations
• Correspondence with customers or suppliers

The aim is to ensure that the VAT treatment can be supported if HMRC asks for evidence.

Common VAT risks for healthcare staffing arrangements

Businesses should take care not to over-apply HMRC’s updated position. Common risks include:

• Assuming all medical staff supplies are exempt
• Applying exemption to workers who are not GMC-registered doctors
• Failing to check whether the role requires a registered medical practitioner
• Continuing to charge VAT without reviewing affected supplies
• Submitting refund claims without considering unjust enrichment
• Ignoring partial exemption consequences
• Failing to keep evidence to support the VAT treatment
• Treating historic and current supplies inconsistently

Errors can lead to underdeclared VAT, overclaimed input VAT, penalties, interest and HMRC enquiries.