The smart choice for self-employed professionals

News

• All News
•  
• General News
• Taxes & Legislation
• Operational Updates

Ask A Question

Title*

Forename*

Surname*

Your Question*

Email Address*

 

HMRC look into NHS schemes

11.07.13

In 2009, the VAT Staff-Hire Concession, a ruling which allowed some temporary medical staff to be exempt from VAT, was withdrawn by Her Majesty's Revenue & Customs (HMRC). Since then, several schemes have sprung up to get around the change and avoid paying the correct amount of VAT.

In the wake of many multinational companies reassessing their tax agendas in the UK, the NHS is next on the list following criticism of the way they have been paying some of their contractors.

At a time when even public bodies, such as the 65 year-old health service, are in desperate need of cut-backs, it is no surprise that schemes which completely avoid paying the 20% VAT charge are tempting.

The current bill for contractors in the NHS sits at around £1billion, which is a further indication into the financial situation in the service – contractors are cheaper to maintain than full-time employees.

Margaret Hodge, Chair of the Public Accounts Committee, told ITV News: "It is completely unacceptable for a publicly funded body to deliberately set about avoiding a fair tax due...it is simply wrong. And I bet you on this the 20% they save on VAT, doesn't go back into the NHS".

According to ITV News, over 30 trusts in England are using one of these schemes in order to save millions due to increased pressure and budgeting.

A HMRC spokesperson told ITV:

"HMRC is aware of this issue and we are actively looking into it to ensure the right tax is paid. A placement for a period of one or a few shifts is clearly not consistent with a contract of employment but, rather, a supply of staff by the agency, liable to VAT in full.

"NHS Trusts can either employ people and assume the responsibilities that go with that, or use agency staff and incur VAT in full. That choice is for NHS managers but the VAT rules are clear".

These schemes fly in the face of a deliberate change by HMRC to clarify and correct the VAT treatment for this type of supply. Consort, due to its turnover, is required to be VAT registered and make monthly payments on account. The rules are clear and VAT will be charged on all services unless they are exempt from VAT or supplied to countries outside of the scope of VAT. Consort regularly takes advice both from its professional advisors and directly from our own VAT office.

<< Back to All News