My Department and Revenue have, for some time, been aware of issues arising from contractual arrangements within the General Practitioner (GP) community whereby some GPs treat income under their General Medical Services (GMS) contract as income of a GP practice in which they are a partner or an employee, rather than income of that individual GP.
Revenue issued a guidance note to tax practitioners through the Tax Administration Liaison Committee in July of this year clarifying the correct tax treatment of GMS income under tax legislation. That guidance confirmed there would be a transitional period for compliance with existing tax law, until 1 January 2024. Revenue will soon publish supplementary guidance on this matter. Although the guidance is being widely reported as a proposed tax change, I would note that it does not, in fact, introduce a change to the tax treatment of GPs. Instead, it simply clarifies the existing legal and administrative position.
In accordance with Section 58C of the Health Act, a GMS contract is between the HSE and an individual GP. My Department and Revenue understand that, as such, the HSE does not enter into GMS contracts with a medical practice, whether the practice is structured as a partnership or a company. This means that, as a matter of law, income under a GMS contract belongs to the GP who entered into the contract with the HSE - this legal position was confirmed in a recent Tax Appeals Commission determination issued in January 2022 (01TACD2022). The position does not change because a GP mandates the payment of GMS income to a medical practice.
A GP who holds a GMS contract is, under tax legislation, a chargeable person as regards income arising under the GMS contract and should report that income under the self-assessment system. The GP is entitled to claim a credit for Professional Services Withholding Tax deducted by the HSE on GMS payments.
There is no legal basis to treat income arising under a GMS contract entered into between a GP and the HSE as if it were income arising under a contract between the HSE and the medical practice in which the GP is a partner or an employee. The approach being taken is intended to ensure that the tax treatment of GMS income reflects the contractual position.
Revenue has engaged with tax practitioners on the matter through the Tax Administration Liaison Committee. In an effort to find a solution to this issue, discussions have taken place between officials in my Department, Revenue, the HSE and the Department of Health. Although my Department and Revenue are conscious of the difficulties being experienced by GP practices, they must be cognisant of the legislation.
Given the core issue concerns the contractual arrangements involving GPs, there may be scope for the Department of Health and the HSE to examine the issue from a contractual viewpoint.
As outlined, the relevant tax policy and legislation remain unchanged, however, to assist GPs and medical practices in complying with their obligations under tax law, Revenue is allowing a transitional period to 1 January 2024 and is preparing further guidance to assist GPs in applying the correct tax treatment in respect of their GMS income.
Meanwhile, officials in my Department, Revenue, the HSE and the Department of Health continue their consideration of the issue. I will provide a further update on the matter soon.
