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GPs back fines to stamp out DNAs

The GPC is warning GPs face a 'complete nightmare' as a result of a European court ruling that they must charge VAT for producing medical reports.

The decision means hundreds of practices could have to become VAT registered and face a huge increase in red tape.

Under the European Court of Justice ruling, VAT must be charged on medical examinations or reports carried out by GPs for the purposes of enabling a third party, such as an insurance company or personal injury solicitor, to make a decision on a course of action.

Medicals to assess insurance premiums, personal injury claims, suitability for employment and entitlement to benefits are included.

Practices earning more than the £58,000 threshold from carrying out such work would be affected and would be forced to register for VAT.

The BMA is in talks with HM Customs and Excise on how to implement the ruling in the UK, with a decision expected later this year.

GPC negotiator Dr Peter Holden said the decision opened up a 'can of worms'.

He said: 'This is a complete nightmare for ourselves, for Customs and Excise and for patients. The opportunities for scams, schemes and confusion are terrible.'

The complexities involved in the issue meant it would be some time before guidance could be given to GPs, he added.

Paul Kendall, a partner at Dodd & Co accountants in Penrith, Cumbria, said GPs were left in limbo by the decision. 'Most GPs would rather stay away from VAT if they have the option,' he said.

Bob Senior, director of medical services at accountants BKL Tenon in South-ampton, said it would be more trouble than it's worth to become VAT registered.

'There are opportunities but on quite a small scale. Many practices will still see the work as a good source of income but may say life is too short to try and reclaim VAT,' he added.

Practices with earnings over the threshold could avoid having to register for VAT by accounting for their earnings across each partner.

By Ian Cameron

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