MainPay Limited: Taxable supply of staff or exempt supply of medical care?

The First Tier Tribunal (FTT) have decided that MainPay was making a taxable supply of staff rather than exempt medical care.

MainPay had contracts with medical professionals, including consultant doctors and provided the services of these medical professionals. MainPay argued control of the medical professionals did not pass to the NHS Trust’s where the consultants were deployed and this meant there was no supply of staff. The consultant doctors were highly skilled and experienced, capable of working independently and making their own medical judgements.

The FTT rejected the ‘control’ argument put forward as being the deciding factor in this case. The more important question was how the consultants worked. In this case, operational control was considered more important, including when and where the consultant worked. The NHS Trust set the operational framework and policies the consultants were working under and this brought the consultant into the organisation in the same way as consultants who were directly employed.

This is another in a long line of VAT cases on supplies of staff vs supplies of other types of service. One of the key deciding factors in these cases is whether ‘control’ of the individuals involved passes to the end customer from the supplier. It was reasonable for MainPay to focus on the fact that consultant doctors can work independently and can make their own clinical decisions. However, it was not the only factor to consider. If the end customer has an established organisation, with robust operational procedures and policies individuals must comply with, this may suggest the individual works as part of that operational framework and ceases to be part of the suppliers ‘organisation’ for the period of the arrangement. It remains to be seen whether this case will be further appealed, but it serves as an important reminder to look at the full facts in each case.