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GP confusion over VAT rules

Confusion surrounds new VAT rules coming into force this week with many GPs in the dark about which aspects apply to them.

The changes mean that VAT will be chargeable at 17.5% from 1 May for anything outside GPs' core business of the 'protection, maintenance or restoration' of patients' health.But the charges will only apply to GPs whose overall practice income from VAT-able work is more than £64,000.GPs in that category will now be taxed on providing fitness certificates for pre-employment medicals.Cosmetic surgery will be taxable if not part of a 'health treatment programme'.Other areas subject to VAT include paternity testing, writing articles for journals, and general administrative services such as countersigning passport applications or providing character references. Conference presentations to a non-medical audience are also now VAT-able. But there are many grey areas. GPC negotiator Dr Peter Holden said: 'There are no simple rules as there are 1,700 categories of fees. Some are inside the scope of VAT, others outside. There are all sorts of nonsenses.'HM Customs and Excise widened the tax net following a European Court of Justice ruling that health professionals were offering 'fringe' services outside direct patient care, but paying no VAT on them.Any service provided under a GMS, PMS or APMS contract remains VAT exempt, however. Cremation certificates (forms B, C, F and FF) will also not be subject to VAT. Dr John Canning, chair of the BMA's professional fees committee, said: 'All GPs need to be aware of the new rules. For the vast majority they will have no impact. But the VAT inspector wields considerable power and doctors may have to prove they do not owe anything.'GPs could demand higher fees to cover the extra VAT charges, but this could scare off some clients, said Bob Senior, a leading medical accountant who works for Tenon.Mr Senior said a contradiction in tax law remained – GPs being exempt from VAT connected to reports for insurance purposes. 'But this is likely to be changed and put in with the new VAT rules,' he added.

Key VAT areas affecting GPs

the changes will affect practices with VAT-able income of £64,000 or more. GPs will now pay VAT on:• writing pre-employment fitness certificates• paternity testing services• fees for journal articles or talks at non-medical conferences• cosmetic surgery not part of a 'health treatment programme'VAT will not be charged for:• any work part of a GMS, PMS or APMS contract• writing cremation certificates• family planning services

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