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Tax Case Digest - July 2020

This month’s Chartered Accountants Tax Case digest takes a look at a Tax Appeals Commission (TAC) determination on the VAT treatment of medical locum services.

REDACTED Appellant v Revenue Commissioners, 126TACD2020

This TAC case considers the appeal of an assessment to VAT raised in dispute of the entitlement to the exemption from VAT on medical locum services provided by the Appellant under paragraph 2(3), Schedule 1 of the Value Added Tax Consolidation Act 2010 (VATCA 2010) and Article 132(c) of Council Directive 2006/112/ EC as amended (the Directive).

Revenue had raised the assessment on the basis that exemptions from VAT are the exception to the rule and that the supplies of medical locums are that of staff, not medical services.

The TAC has been requested to state and sign a case for the opinion of the High Court in respect of this determination.


The Appellant, an unlimited company, supplied services to GP practices and out of hours service providers, through its employee, a registered medical practitioner licenced to practice medicine in the State. In order to practice medicine in Ireland, a doctor must hold professional indemnity insurance. Such insurance can only be obtained in the name of a natural person. Accordingly, the Appellant relied on the insurance held by its employee and contributed towards part of the cost of the premium.

An association of GPs arranged for the provision of locums to GP practices providing holiday or sick leave cover, and out of hours services to patients. As such, the Appellant received payment from the association for the provision of medical locum services to local GP practices. However, patients paid the GP practice in which they were seen, directly.

When the Appellant’s employee saw patients, he performed the “normal GP functions and made appropriate decisions”. Diagnosis and decisions were between patient and doctor, and no direction was provided on how to perform his medical duties. No contractual arrangement was in place between the Appellant and the association of GPs; however, the Appellant employee was familiar with their handbook, policies, guidance and procedures.

The association of GPs was a large organisation, with a number of employees carrying out different roles, such as administration and rota scheduling. The association also employed a director of finance and a medical director. The Appellant’s employee consulted with the medical director in the same way he would ask advice of a colleague on medical issues and he liaised with the medical director on the prevalence of disease in the area of practice.

Notwithstanding the medical director’s position, the Appellant considered the medical services of its employee to be provided directly to the patient and the association of GPs had no involvement in the provision of medical services to patients under his care.


The TAC found in favour of the Appellant, as the Appellant’s employee provided medical care to patients presenting to the association of GPs and the only services provided by the association were infrastructure, and back up administrative and financial functions. The Appellant’s services were considered to constitute “Professional medical care services recognised as such by the Department of Health and Children” pursuant to VATCA, Schedule 1, paragraph 2(3) and therefore exempt from VAT.

While recognising the settled law requiring the strict interpretation of terms used to specify exemptions, the TAC referred to Customs & Excise Commissioners v Reed Personnel Services Ltd [1995] STC 588 where Laws J. at page 595 said: “the nature of a VAT supply is to be ascertained from the whole facts of the case.”

Further reference was made to the settled law on the medical services exemption being defined by the nature of the service and not the legal form of the supplier. It was found that to distinguish the Appellant’s services from the medical services provided by its employee would be contrary to the principle of fiscal neutrality and therefore unlawful.

In its analysis of the nature of the service provided by the Appellant, TAC considered:

  • The fact that the association of GPs had their own handbook, policies, guidance and procedures and administrative staff to be irrelevant;
  • The medical director, in acting as a point of liaison, did not detract from the medical services performed by the Appellant or its employee;
  • The fact professional indemnity insurance was partially paid by the Appellant served to support the assertion of medical care services being provided; if the Appellant purely supplied staff such insurance would not be required;
  • The imposition of a VAT charge on the provision of medical services would increase the cost of treating patients and serve as an impediment to those seeking medical care.

Weight was given to the level of control and supervision involved in determining whether there was a supply of medical services or staff, on foot of persuasive UK case law on the equivalent exemption. The TAC found the association of GPs did not control or supervise the activities of the Appellant in the provision of medical care to patients, and if anything, merely acted as an agency in procuring a doctor to treat patients in its clinics.

The full determination in this case is available from the Tax Appeal Commissions website: