In Archus Trading Limited v HMRC [2020] TC07557, the First Tier Tribunal (FTT) concluded that the supply of GPs were supplies of services, not staff, and qualified for VAT exemption.

Archus received an enquiry from HMRC as to the nature of the services it provided. Archus’ agent wrote to HMRC confirming that Archus was a 'contractor' as defined in the Health Board Primary Medical Services Contracts (Scotland) Directions 2011 and that their supplies constituted 'the provision of medical care'.

Medical care services are exempt from VAT, even where the company has been trading above the VAT threshold. HMRC wrote to Archus contending that the services were supplies of staff and hence liable to VAT at the standard rate.

Under its contract, Archus supplies staff to Ayrshire and Arran Health Board ('Board') which in turn provides health care to HMP Kilmarnock.

  • Archus argued many of the provisions in the contract related to the provision of medical services as opposed to a supply of staff.
  • It also argued that if the contract were for the supply of staff, then it should have specified that control of those individuals would pass to the Board.
  • There was no requirement for professional indemnity insurance.

Archus appealed to the FTT who considered that it was material as to who provided ‘direction and control’ of the staff. The FTT found:

  • That the direction and control of the GPs and locums rested at all material times with Archus and not with the Board.
  • Archus supplies were a ‘provision of medical care’.

Those supplies fell within the exemption from VAT and the appellant had no requirement to register for VAT.

Comment: The supply of staff is subject to VAT at the standard rate and the supply of medical care is exempt from VAT. Care must be taken when drafting contracts to ensure control and management of staff remains with the provider of medical care if the supplies are to be VAT exempt.  


Health and welfare: VAT (subscriber)
Reduced rating, zero-rating and VAT exemption can apply to various services relating to medical care, health and welfare.

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Archus Trading Limited v HMRC [2020] UKFTT TC07557