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BMA fights to delay VAT registration nightmare for GPs

April 2006 start date would cause 'severe difficulties' for practices, Government is warned

The BMA is making a desperate attempt to delay new tax rules which will force three-quarters of GPs to register for VAT.

The rules are based on a European Court of Justice decision and will have to be implemented eventually.

But the BMA has pleaded with the Government not to hurry them through in time for the start of the next financial year in April.

In a submission to HM Revenue & Customs, it said GPs needed at least until April 2007 to register for VAT and get to grips with the new, stricter tax regime.

Bringing in the change before would cause 'severe difficulties' for practices affected, it added.

The European Court of Justice ruled in November 2003 that VAT must be charged on medical services that do not directly 'protect, maintain and restore' health.

Medicolegal reports and medicals for third parties, such as insurance companies, and a range of certificates that GPs issue at the request of patients, will become liable.

Practices earning more than £60,000 from such work ­ expected to be most with three or more partners ­ will be required to register for VAT. All core NHS services remain VAT-free.

The BMA said practices needed time to train staff, update software and change accounting systems. They may even need to instal cash tills.

Practices would need to consider reducing the amount of work which was liable for VAT or even break up partnerships in order to fall below the VAT threshold, the BMA said.

Hasty change risked practices falling foul of severe penalties, it added.

Many grey areas, such as pre-employment medicals, which arguably do contribute to health and so should remain tax-free, also needed clarifying.

Dr Peter Holden, chair of the BMA's professional fees committee, said there was 'no option' on the ruling so the BMA was focusing on 'softening the blow'.

He said: 'It's how to make it easy to implement and to take any advantage from the system that is legitimate.'

Medical accountants said GPs needed 'breathing space'.

Paul Kendall, a partner at Dodd & Co, of Penrith, Cumbria, said: 'They are going to be worse off and education and training will be disruptive.'

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