Locum doctors are not just another staffing supply — on 17 July 2026 HMRC published Revenue and Customs Brief 6 (2026), replacing Brief 9 (2025) and confirming that supplies of GMC-registered locum doctors can fall within the VAT exemption at Item 5, Group 7, Schedule 9 of the VAT Act 1994, including where the doctor is supplied through an employment business. As chartered certified accountants in Surrey advising medical staffing businesses, GP practices and private clinics across the UK, TaxDigit explains what HMRC has conceded, where it has drawn the line, and how the four-year refund window works.
What the Locum Doctor Exemption Is — and Why It Matters
Item 5 of Group 7, Schedule 9 exempts “the provision of a deputy for a person registered in the register of medical practitioners”. For years HMRC read that wording extremely narrowly, treating it as covering little more than out-of-hours GP deputising services. Since the staff hire concession was withdrawn in 2009, agencies and employment businesses have generally charged 20% VAT on locum doctors as a supply of staff.
That is an expensive default. NHS trusts, GP practices and most private healthcare providers make exempt supplies, so VAT charged on locum cover is largely irrecoverable — a genuine 20% cost on one of the largest lines in a clinical budget. In Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 (TC), the First-tier Tribunal held that HMRC’s interpretation was too narrow and that locums supplied by agencies can also come within Item 5. HMRC did not appeal.
What Changes From 17 July 2026
- Brief 6 (2026) replaces Brief 9 (2025) and sets out HMRC’s settled position following the tribunal decision.
- Exemption can apply where the individual is registered in the GMC register of medical practitioners and is performing medical services in that professional capacity.
- It applies whether the doctor is engaged directly or supplied through an employment business or staffing agency.
- It is no longer limited to out-of-hours GP cover — the narrow deputising reading has gone.
- Suppliers who accounted for output tax on qualifying supplies may claim a refund on form VAT652, restricted to the last four years.
Claims should be marked “Locum doctors claim RCB 6/26” and sent to the dedicated HMRC mailbox, with calculations broken down by VAT return period.
The Catch — Who Is Still Outside the Exemption
HMRC has kept the scope deliberately tight, and this is where most of the risk sits. The Brief states that other health professionals registered with the GMC — including allied health professionals, anaesthesia associates and physician associates — are not within this exemption, and neither are general staffing services where what is really being supplied is a body rather than medical care.
Equally important: VAT exemption is not optional. A supplier that becomes partly exempt loses input tax recovery on related costs, and HMRC can charge interest of up to 8% on input tax already reclaimed. A refund claim that looks attractive on the output tax line can be materially smaller once the input tax clawback and partial exemption method are worked through.
Who Benefits — and Who Should Still Pay Attention
The clearest winners are NHS bodies, GP practices and private clinics that have been absorbing irrecoverable VAT on locum cover. Staffing suppliers benefit too, but only where they can show the refund belongs to them: HMRC will not repay output tax where doing so would unjustly enrich the supplier, which usually means proving the VAT was a cost the supplier bore rather than one passed on in the price.
Practices using non-doctor temporary staff should not assume the same treatment applies, and anyone mid-way through an HMRC enquiry or appeal should expect claims to be held until that concludes.
What Suppliers and Clinics Should Do Now
- Review the last four years of locum doctor invoices and identify which supplies involved a GMC-registered doctor delivering medical services.
- Read the contracts: whether a clinic can recover wrongly charged VAT from its supplier usually turns on the VAT clause and whether the price was VAT-inclusive.
- Model the partial exemption consequences and input tax clawback before submitting anything — a gross claim is not a net benefit.
- Prepare the unjust enrichment evidence: pricing methodology, correspondence and how customers treated the VAT.
- Fix the treatment going forward, so you are not still standard-rating supplies that should now be exempt.
Frequently Asked Questions
Are all locum doctors now VAT exempt?
No. The exemption applies where the individual is GMC-registered and is performing medical services in that professional capacity. A doctor supplied to cover an administrative or managerial role is not automatically covered.
Can a clinic claim the VAT back from HMRC directly?
Not usually. The output tax was accounted for by the supplier, so the claim is the supplier’s. A clinic normally has to ask its supplier to make the claim and pass the benefit on, subject to the contract.
How far back can a claim go?
Four years. The usual VAT capping rules apply, so each month of delay closes another period permanently.
Does this cover physician associates?
No. HMRC has expressly excluded physician associates, anaesthesia associates and allied health professionals, even though they are GMC-registered.
How TaxDigit Can Help
TaxDigit advises on VAT liability, partial exemption and error correction, alongside tax advisory and planning and day-to-day bookkeeping for healthcare businesses. We can review four years of locum supplies, quantify the net claim after input tax clawback, prepare the VAT652 and build the unjust enrichment file. If you also hold significant capital assets, our note on the 2026 Capital Goods Scheme reform is worth reading alongside this. The Brief itself is on gov.uk.
Plan Ahead With TaxDigit
If you supply or engage locum doctors, the four-year window is already closing at one period a month. Call 01483 230 777, email info@taxdigit.co.uk or book a consultation with our team in Guildford, Surrey.
