VAT – Health Professionals providing Medical Services

Accounting for VAT on goods and services provided by registered health professionals, including doctors, dentists, and physiotherapists might not be as straight forward as you initially thought, particularly where the business is operating as a Limited Company and there are workers providing medical care.

A ‘health professional’, is accepted by HMRC to mean the following professionals when they’re enrolled or registered on the appropriate statutory register. 

• Medical practitioners
• Optometrists and dispensing opticians
• Osteopaths
• Chiropractors
• Nurses, midwives and health visitors
• Dentists, dental hygienists, dental therapists, dental nurses, clinical dental technicians, dental technicians and orthodontic therapists
• Pharmacists
• Professionals registered under the Health Professions Order 2001, these professionals are:
  Arts therapists, biomedical scientists, chiropodists or podiatrists, clinical scientists, dietitians, hearing aid dispensers, occupational therapists, operating department practitioners, orthoptists, paramedics, physiotherapists, practitioner psychologists, prosthetists and orthodontists, radiographers, and speech and language therapists, but will also include any medical care professionals added to the Order at a future date.
• Osteopaths
• Chiropractors
• Nurses, midwives and health visitors
• Dentists, dental hygienists, dental therapists, dental nurses, clinical dental technicians, dental technicians and orthodontic therapists
• Pharmacists

For the purposes of VAT, medical services (including medical care and treatment) are restricted only to services where the primary purpose of it is the protection, maintenance or restoration of the health of the person concerned.

Where the service is principally aimed at the protection, maintenance or restoration of health of the person concerned, the supply is exempt. 

A complication arises where care services are performed by a person not enrolled in a statutory medical register. These can be exempt, but only when the service is health or nursing care that is provided either:

• a) under the direct supervision of a health professional (other than a pharmacist) who monitors the services through regular checks, or 
• b) in a hospital or nursing home

Care services provided by any person who is not a registered health professional, are ‘directly supervised’ for the purposes of the VAT exemption when all of the following conditions are met:

• The services are supervised by one of the registered health professionals listed above and the supervisor is professionally qualified to perform and supervise the service.
• The service requires supervision by a registered health professional and is provided predominantly to meet the medical needs of a client.
• The supervisor has a direct relationship with the staff performing the service and is contractually responsible for supervising their services.
• A qualified supervisor is available for the whole time that the care service is provided.
• No more than 2,000 hours per week of staff time are supervised by a single health professional.
• A supervisor has a say in the level of care to be provided to the client, and will usually see the client prior to the commencement of the care service.
• The supervisor must be able to demonstrate that they monitor the work of the unregistered staff.

Where the conditions are not met, your services are standard-rated, even when performed to meet the medical or health care needs of a client.

The next question is which workers come under the direction and control of the business?

HMRC say that staff supplied by an employment business may be either an employee of that business or self-employed and engaged by that business. In both cases, the workers’ services are provided to the employment business, which in turn makes a supply of that worker to the client. If the worker comes under the direction and control of the client, this is a supply of staff. The employment business in these circumstances is acting as the ‘principal’.

When an employment business supply registered health professionals as a principal to a third party (i.e. the end consumer), where the health professional is working under the control and guidance of the third party, it’s making a taxable supply of staff to that third party – not an exempt supply of healthcare. It’s the third party, which is responsible for providing healthcare to the final patient, rather than the business supplying the staff which has no such responsibility.

A taxable supply of staff is made even where the employment business is responsible for ensuring that the workers it provides are properly trained and qualified when they work under the control of the third party.

However, if the employment business maintains the direction and control of its health professional staff to make a supply of medical care directly to a final consumer, then the employment business is providing medical services rather than merely a supply of staff. In these circumstances, the business is making an exempt supply of health services. 

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