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VAT changes on temporary medical staff

VAT on Temporary Medical Staff: What Revenue and Customs Brief 9 (2025) Means for Healthcare Providers

Recent guidance from HM Revenue & Customs has clarified the VAT treatment of the supply of temporary medical staff through agencies and other intermediaries. The update also confirms the continued availability of the VAT exemption for qualifying medical care, while highlighting circumstances where VAT may have been incorrectly charged, creating potential opportunities to reclaim overpaid VAT.

This article summarises the key points from the guidance and explains what practices, clinics and healthcare providers should consider next.

Revenue and Customs Brief 9 (2025)
Following HMRC’s loss in the VAT Tribunal case Isle of Wight NHS Trust v HMRC [2025] UKFTT, HMRC issued Revenue and Customs Brief 9 (2025) on 15 December 2025.

The Brief clarifies the VAT liability of supplies of temporary medical staff made via agencies and other intermediaries. Crucially, it confirms that the long-standing VAT exemption for medical care remains available, but only where the conditions for exemption are met.

VAT exemption for medical care

A supply can remain VAT exempt where it qualifies as medical care rather than the supply of staff.

For the exemption to apply, the supply must:

  • Be a supply of medical care
  • Be provided by, or under the responsibility of, a registered or regulated healthcare professional
  • Be made for the purpose of protecting, maintaining or restoring human health

Where an agency is merely introducing or supplying staff, and either the agency or the end user takes responsibility for the staff and their work, HMRC’s position is that this represents a standard-rated supply of staff, rather than an exempt supply of medical care.

As a result, determining whether the exemption applies depends heavily on the contractual arrangements and the reality of how the services are delivered, including who exercises control and who bears clinical responsibility.

Opportunity to reclaim overcharged VAT

Revenue and Customs Brief 9 (2025) recognises that VAT may have been incorrectly charged in previous periods, particularly where supplies should have been treated as exempt medical care.

Where VAT has been overcharged, there may be scope to:

  • Recover VAT from suppliers who incorrectly charged VAT on exempt supplies, and/or
  • Make repayment claims to HMRC, subject to the usual statutory time limits and conditions

For practices, clinics and healthcare providers that frequently engage temporary medical staff, this could represent a significant recovery opportunity.

Next steps

We recommend reviewing both historic and current arrangements for temporary medical staff to confirm whether the VAT exemption should apply.

We can assist by:

  • Analysing contracts and working practices against HMRC’s updated guidance
  • Identifying instances where VAT may have been incorrectly charged
  • Supporting VAT reclaims or discussions with suppliers

If you would like to discuss how Revenue and Customs Brief 9 (2025) applies to your circumstances, or whether you may be entitled to reclaim VAT, please get in touch.