Standard rated staff or exempt medical services to health board?

The company’s shareholders and directors were qualified doctors who were responsible for supplying services to Ayrshire and Arran Health Board in providing a GP service for inmates of HMR Kilmarnock. The contract referred to the company ‘providing staff to the NHS so that the NHS can meet its obligations in relation to the health of inmates of HMR Kilmarnock’. HMRC decided that the company was providing a standard-rated supply of staff and should be registered for VAT. In other words the health board provided the medical services not the taxpayer.

The First-tier Tribunal found that it was the taxpayer that provided the services. It decided on ways of working training requirements provision of locums and disciplinary matters. Indeed several factors indicated the taxpayer was carrying out supplies of medical services in its own right irrespective of what the contract said:

• there were regular GP consultations carried...