Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I am taking this matter on behalf of my colleague, the Minister for Finance, Deputy Michael McGrath. The Department of Finance and Revenue have for some time been aware of issues arising from contractual arrangements with the GP community whereby some GPs treat income under the GMS contract as income of a practice in which they are a partner or an employee, rather than income of that individual GP. Revenue issued guidance, a tax note, to tax practitioners through the tax administration liaison committee in July clarifying the correct treatment of GMS income under tax legislation. To allow GPs and practices time to make any necessary adjustments to their arrangements to ensure compliance with the applicable tax code and legislation, the guidance confirms that the transitional arrangements will be in place until the end of 2023.

Revenue will soon publish supplementary guidance on this matter.

Although the guidance is being widely reported as a proposed tax change, 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 58 of the Health Act, a GMS contract is between the HSE and an individual GP. The Department of Finance 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. That position does not change because a GP treats GMS income as the income of a medical practice. This legal position was confirmed in a recent Tax Appeals Commission determination in January 2022.

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 from 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 taken to date has intended to ensure that the tax treatment of GMS income reflects the contractual position. In an effort to find a solution to this issue, discussions have taken place between officials in the Department of Finance, Revenue, the HSE and the Department of Health.

Earlier this week the Minister for Finance signalled his intention to table an amendment on Report Stage of the Finance (No. 2) Bill 2023 to provide that where individual GPs enter into contracts with the HSE to provide certain medical professional services and provide those services in the conduct of a partnership profession with other individual GPs, the income from those professional services can be treated for income tax purposes to be that of the partnership.

It should be noted that because there are a number of business arrangements and models in the GP sector, including partnerships, companies, employees and employers, the proposed amendment would resolve some but not all of the issues arising. There may, however, be scope for the Department of Health and the HSE to examine the issue from a contractual viewpoint as part of their ongoing strategic review of general practice.

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