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HMRC has recently provided further clarification on the VAT treatment of supplies of temporary medical staff (locum doctors) within its Revenue & Customs Brief (RCB) 6 (2026) dated 17 July 2026.
This latest update follows on from RCB 9 (2025), published in December 2025, and provides greater certainty around when supplies of locum doctors may qualify for VAT exemption. It also explains HMRC's approach to historic VAT claims where VAT may have been previously accounted for on such supplies.
While the updated guidance relates to a specific area of VAT legislation, it could have important practical and financial implications for NHS bodies, private healthcare providers and employment businesses supplying temporary locum doctors. As well as considering the VAT treatment of future supplies, affected organisations may also wish to review historic arrangements to determine whether any corrective action is required.
The updated guidance provides greater certainty for organisations that have been awaiting clarification following HMRC's earlier announcement in December 2025, while also highlighting a number of wider VAT considerations that businesses should not overlook.
HMRC's updated position
HMRC states that where locum doctors are registered with the General Medical Council (GMC) and perform medical services in that professional capacity, the supply of those doctors may fall within the VAT exemption under Item 5, Group 7, Schedule 9 of the VAT Act 1994 for: "the provision of a deputy for a person registered in the register of medical practitioners".
This includes circumstances where locum doctors are supplied through an employment business.
The VAT exemption does not extend to the supply of other GMC-registered healthcare professionals, such as allied health professionals, anaesthesia associates and physician associates.
The updated guidance therefore provides greater clarity on the circumstances in which supplies of locum doctors may qualify for VAT exemption, while also confirming where the exemption does not apply.
What does this mean in practice?
One of the most significant aspects of RCB 6 (2026) is HMRC's confirmation that businesses which have overdeclared VAT on affected supplies during the past four years may be able to submit claims to recover that VAT.
However, recovering overdeclared VAT is unlikely to be as straightforward as simply submitting a claim. HMRC has confirmed that each claim will be reviewed on its own merits, considering factors such as unjust enrichment, partial exemption and wider VAT accounting implications before any repayment is approved.
Businesses should also remember that any historic claim may require corresponding adjustments to input VAT previously recovered on associated costs. This is because supplies that were originally treated as taxable may now be regarded as VAT exempt, potentially affecting previous VAT recovery calculations.
For many organisations, the overall financial position may therefore be more complex than simply identifying previously overdeclared output VAT. Understanding the wider VAT consequences before making a claim will be an important part of the review process.
What should organisations consider?
NHS bodies, private healthcare providers and employment businesses supplying locum doctors should review both their historic and current arrangements in light of HMRC's update.
In particular, organisations should consider:
- whether any supplies fall within the scope of the VAT exemption
- how VAT exemption for such supplies may affect VAT recovery and partial exemption calculations
- whether existing contractual or pricing arrangements require amendment
- whether there is scope to submit historic VAT claims to HMRC.
Although the updated guidance may present opportunities to recover VAT, historic claims will not necessarily be straightforward. Every organisation will have different contractual arrangements, VAT recovery positions and commercial circumstances, meaning the impact of the guidance will vary from one business to another.
Reviewing arrangements now will ensure organisations understand the VAT and wider commercial implications before making changes to their VAT treatment going forward or submitting a claim in respect of historic supplies. Taking advice at an early stage can also help ensure that any claims are supported by a full assessment of the associated VAT consequences.
How we can help
HMRC's updated guidance provides welcome clarification, but it also introduces a number of practical considerations for organisations supplying or engaging locum doctors.
If you would like to understand how the revised guidance could affect your organisation, or would like advice on historic VAT claims, VAT recovery, partial exemption or the wider implications for your business, please speak to your usual UHY adviser or contact a member of our specialist VAT team.
