HMRC Confirms Locum Doctor VAT Position

Back in May we published our FAQs on the December 2025 VAT update affecting locum doctor supply, off the back of Revenue & Customs Brief 9 (2025) and the Isle of Wight NHS Trust tribunal decision. At the time, HMRC’s position was vague — they weren’t insisting on exemption, but they hadn’t confirmed it either, and the sector was left waiting for a firmer steer.

That steer has now arrived. On 17 July 2026, HMRC published Revenue & Customs Brief 6 (2026), setting out a clearer position on the VAT treatment of GMC-registered locum doctors. Here’s what’s changed, and what it means for your recruitment business.

What HMRC has now confirmed

• Previously, HMRC read the “provision of a deputy” exemption narrowly — treating it as limited to traditional deputising arrangements like GP out-of-hours cover, and taxing locum supply through employment businesses as standard-rated staff supply. The Isle of Wight decision rejected that narrow reading.
• HMRC has now gone further than simply acknowledging the tribunal’s decision: it has set out its own policy position and accepts that supplies of GMC-registered locum doctors may fall within the existing VAT exemption for the provision of a deputy for a registered medical practitioner (Item 5, Group 7, Schedule 9, VAT Act 1994).
• This applies whether the doctor is supplied directly or via an employment business — so agencies and staffing intermediaries are directly in scope.
• The exemption is narrow. It only covers individuals who are registered with the GMC and performing medical services in that capacity, in a role that must be carried out by a registered medical practitioner.
• Other GMC-registered professionals — including physician associates and anaesthesia associates — are specifically excluded, along with allied health professionals and general staffing services more broadly.

This is a firmer statement than the December 2025 brief, which stopped short of confirming exemption applied. Businesses now have something closer to a definitive HMRC position to work from — though, as ever, the specifics of how you supply staff will determine whether it applies to you.

If you’ve overdeclared VAT

You may be able to claim back overdeclared output tax if:

• you charged VAT at the standard rate on locum doctor supplies
• you now consider those supplies should have been exempt
• the overdeclared VAT relates to supplies made in the last 4 years

Only the business that made the supply and charged the output tax can claim — so if you’re further down a supply chain, this isn’t your claim to make.

How to make a claim

Depending on the amount involved, you can either:

• adjust your next VAT return for the period in which you discover the overdeclared tax, or
• submit an error correction notification

For error correction notifications, HMRC wants:

1. A completed VAT652 form
2. Sent by email to ccg.locumdoctorsclaim@hmrc.gov.uk
3. With “Locum doctors claim RCB 6/26” in the subject line
4. Setting out the basis of the claim, the amount, how it’s calculated, broken down by VAT period, with supporting documentation available on request

Claims: how HMRC will handle them

HMRC has confirmed claims will be assessed case by case, taking into account:

• unjust enrichment
• partial exemption
• whether overdeclared VAT has been correctly accounted for across the whole supply chain

Claims won’t be processed where there’s ongoing litigation or where HMRC assurance activity is under way, and HMRC may ask for supporting documentation before agreeing a refund.

Don’t forget the input tax side

If your supplies shift from taxable to exempt, that has a knock-on effect on input tax you’ve already recovered — particularly VAT charged by umbrella companies or payroll providers, which you may have been reclaiming. HMRC has confirmed you’ll need to factor in partial exemption rules and can only claim the net position, not the gross output tax figure.

For agencies, this may be the biggest commercial issue in the whole exercise. If clients expect the 20% VAT to be repaid or credited back to them, but the agency also has to restrict input tax recovery on related costs — including VAT charged by umbrella companies — then in some cases, the combined effect could materially reduce, or even wipe out, the profit margin on those supplies.

What this means in practice

• If you supply GMC-registered locum doctors and have been charging standard-rate VAT, it’s time to revisit that position with the new brief in hand.
• Don’t assume this extends to your whole workforce supply — Physician and Anaesthesia Associates and other allied health professionals remain outside the exemption.
• Any claim needs to be worked through net of input tax adjustments, not just the output tax you think you’ve overcharged.
• If clients are already asking about historic VAT, take advice before agreeing to repay anything — repayments trigger your own return adjustments too.

Practical next steps

Before submitting anything, it’s worth working through this in order:

1. Map your workforce. Split out which supplied workers are GMC-registered doctors, which are other healthcare professionals, and which are mixed-role — the exemption only helps with the first group.
2. Quantify your exposure. For the last four years, work out how much VAT you charged on qualifying locum doctor supply, what’s potentially overdeclared, and what input tax adjustments that triggers.
3. Think through the commercial impact, particularly the partial exemption position. If you have to repay or credit output VAT to clients while losing input tax recovery on related umbrella company or payroll costs, the net cost could be significant and may wipe out the margin on those supplies.

4. Gather your evidence together — HMRC has said it may ask for supporting documentation before agreeing a claim.
5. Take specialist advice before submitting, particularly given how much weight HMRC is placing on unjust enrichment and partial exemption in its case-by-case reviews.

This needs to be reviewed as a commercial exercise, not treated as an automatic repayment. Before submitting or agreeing to refund clients, agencies should understand the net impact on profit and cash flow once partial exemption is factored in.

Need Support

If this change could affect your business, it is important to understand the VAT, partial exemption and commercial cash flow implications before taking action.

To discuss how the latest HMRC guidance may affect your position, contact our team today.