Extending VAT to medico-legal work: Final Submission

Executive Summary

We have been asked by HM Revenue & Customs (HMRC) to contribute to their Review of the Scope of the VAT Exemption for Medical Services. Our area of interest is that of medico-legal reporting. This submission seeks to communicate those issues that are of most importance to medical expert witnesses.

In December 2005 we invited the 1,700 medical expert witnesses listed in the UK Register of Expert Witnesses to consider the consultation documentation. To help medical doctors, for many of whom VAT is foreign territory, the Register prepared a number of resources. We were asked to have responses back to HMRC by mid-January 2006. The key findings from this research are as follows.

Medical expert witnesses are generally unaffected by the considerable confusion that appears to surround the type of medical work that will be liable for VAT. All medico-legal reporting will attract VAT.

HMRC is wrong to assume that most medical consultants are already VAT registered. Almost none are. However, according to our own data on fee income for medico-legal work, only about 30% of medical expert witnesses would be required to register for VAT on the basis of turnover.

There is a major need for medical doctors to be educated about VAT. Most doctors have spent many years cocooned within the NHS, far removed from the commercial realities faced daily by business people. Indeed, the large numbers of doctors who have suffered financial loss at the hands of the medico-legal reporting organisations is testament to this sector's lack of commercial acumen. Accordingly, these VAT changes should not now, after a 2 year hiatus, be rushed into effect.

We would suggest a minimum of 1 year's notice be given for the introduction of VAT on medico-legal reporting, i.e. April 2007. This will permit:

• long-running contracts to be adjusted to include VAT in an orderly fashion
• doctors to choose when to begin their VAT registration (by voluntarily registering at a time in the year that suits their own accounting year)
• doctors to focus their minds on understanding the VAT system once a clear deadline has been set.