As if running a surgery for general practitioners was not already a big challenge, your position with respect to liability for VAT is likely to complicate things still further.

Paradoxically, perhaps, it is because the core services provided by GPs – that is to say, medical consultations related to the health care of NHS patients – are exempt from VAT that the tax situation becomes complicated.

VAT for General Practitioners

Chartered Accountants Price Bailey briefly describe the way in which VAT impinges on a medical practice that is otherwise mainly free of such liabilities.

There are, in fact, a surprising number of situations in which the typical GP provides services – beyond the basic provision of services directly related to the protection, restoration or maintenance of the health of a patient – which attract VAT.

Examples include:

  • the dispensing by doctors of medicines, drugs or aids which are self-administered by the patients themselves;
  • the dispensing of prescriptions to private patients – standard rates of VAT apply;
  • the provision of market research services or clinical trials for pharmaceutical companies that do not involve the assessment or care of a patient;
  • testing for paternity;
  • providing professional witness evidence in a court of law;
  • providing signatures on passport application forms; and
  • the provision of any services that are mainly legal, rather than medical in nature.

Services and supplies by GPs which are subject to VAT may be at the full, standard rate of VAT (20%), at a reduced rate (5%) or zero-rated (zero-rated VAT is not the same as VAT exemption).

Similarly, when GPs provide professional advisory services under contracts to Clinical Commissioning Groups (CCGs), explains a briefing published by My Surgery Website, those services are also subject to VAT at the standard rate.

Meeting your VAT liabilities

In short, GPs may find themselves in a position where the VAT applicable to the services they provide are enough to warrant VAT registration – and all the paperwork, additional administration, and staff time that involves, not to mention the liability for payment of VAT and the risk of penalties and interest payments on incomplete or inaccurate VAT returns.

From a situation in which many GPs might feel reassured that the health care they provide as their principal work is VAT-exempt, the position may be very rapidly reached where the management of VAT liabilities becomes every bit as important as that for many other professionals.

Funding your VAT liabilities

One of the challenges in meeting your VAT obligations is likely to be the need to make a VAT return every three months, as required by law.

A way of spreading the burden of VAT payments throughout the year, however, is available through the simple expedient of an unsecured loan from ourselves here at Professions Loans.

Because it is an unsecured loan, you are not saddled with the commitment to a long-term form of borrowing, that attracts interest over many years, but to a short-term period of any period you choose between 3 and 12 months.

Unlike a secured loan, an unsecured loan requires no security against your personal assets, or those of your practice – so the risks are correspondingly slight.

With an unsecured loan such as this, you may also choose precisely the amount you need to borrow, repayments are the same amount each month, and the interest rate is fixed, so that budgeting is again straight forward and may be linked directly to the amount of VAT you need to pay.

Other loans for doctors

An unsecured fixed rate practice loan may be available for sums of between £5,000 and £1 million (or more) – so there is little doubt about one covering any typical VAT liability a GP may need to bear.

But the wide range of sums available also illustrate the way in which this type of relatively short-term borrowing may be used to fund many other projects dear to the hearts of busy GPs and their practice.

Such a loan might prove the ideal solution, for example, for funding the acquisition of new surgery premises or for extending or improving your existing surgery. It might be used for the purchase or lease of specialist medical equipment or other appliances and equipment needed by your practice – such as the installation and commissioning of new IT systems, for example.

Finally, an unsecured fixed rate practice loan may also ensure the funding of the essential professional indemnity insurance needed by every doctor working in your practice, as required by the General Medical Council as your protection and indemnity against medical negligence claims.

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