The Isle of Wight NHS Trust Locum Doctors VAT Case – What It Means for GP Practices

The recent First-tier Tribunal decision in Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 represents one of the most significant VAT developments for primary care in a decade.

The Tribunal held that all locum doctor services, including those supplied through agencies and employment businesses, fall within the VAT exemption for “the provision of a deputy for a registered medical practitioner”.

HMRC has confirmed that it will not appeal the decision, meaning the ruling now sets the position going forward.

For GP practices, this change has direct financial and operational implications.

Why the Case Matters for GP Practices

Historically, many GP practices paid VAT (usually at 20%) on locum doctor invoices sourced through agencies or intermediaries. The Tribunal decision confirms that these supplies should have been exempt, meaning VAT should no longer be charged and may be reclaimed retrospectively, albeit not directly by the practice.

What GP Practices Should Do Now

1. Ensure VAT Is No Longer Charged on Locum Doctor Invoices

From now on, GP practices engaging locum doctors via agencies or intermediaries should not expect VAT to be charged on invoices. This applies to all locum doctor placements, not just GP out-of-hours deputising arrangements, which cover virtually all GP locum scenarios.

If VAT is still being applied:

• Ask the supplier to explain their VAT position
• Reference Revenue & Customs Brief 9 (2025), which confirms HMRC will not appeal the ruling of the case.

2. Discuss Repayment Claims With Your Locum Suppliers

Only the supplier can claim back previously overdeclared VAT. GP practices cannot reclaim this VAT directly from HMRC.

However, practices can and should:

• Contact their locum suppliers
• Confirm whether the supplier intends to submit a repayment claim and encourage them to do so
• Request that the supplier pass back any VAT that the practice originally funded

Many suppliers will be required (or strongly encouraged) to do this because of HMRC’s unjust enrichment rules, which prevent suppliers receiving repayments they are not entitled to keep.

This means that if your practice bore the cost of VAT, you may be entitled to receive the economic benefit of any repayment.

How We Support GP Practices

We can assist practices in navigating the impact of this ruling, including:

• Reviewing historic locum use and identifying VAT exposure
• Engaging with suppliers to ensure repayment is passed on appropriately
• Checking whether suppliers’ claims align with practice records

If you would like any support, please get in touch here.