REC Healthcare has written to Health Services Minister Daniel Poulter to seek clarification about the legitimacy of value added tax (VAT) schemes designed to reduce spend on agency staff within the National Health Service (NHS).
Such schemes are spreading rapidly across the health service at a time when NHS Trusts are under increasing financial pressure and looking to control their costs. They allow NHS organisations to reduce the VAT element of their non-nursing agency spend by allowing them to directly employ work-seekers for a short period through a staff agency procurement outsourcing service.
HMRC has, to date, made no clear ruling about their legitimacy.
Chris Wilford, Senior Policy & PR Advisor says:
“Temporary and locum staff are an indispensable element of the NHS workforce, helping organisations meet fluctuations in demand and cover unexpected absences. Whilst we appreciate the financial constraints many NHS organisations are currently facing, we are very concerned that there continues to be no clear guidance or statement from the Department of Health about the legitimacy of such schemes. This is creating a significant risk for NHS organisations if HMRC deem these schemes to be illegitimate.
“Our members are coming under considerable pressure to enter into such schemes. While there is a real question as to the validity of these schemes we will be advising them they should exercise caution before entering into these arrangements with any NHS trust until HMRC have made a decision on their status. We urgently need government to give the sector a clear steer on this issue.”
The REC will continue to monitor this situation and will keep members updated on any new guidance offered by HMRC.