Written answers

Thursday, 16 November 2023

Department of Finance

Legislative Measures

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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126. To ask the Minister for Finance if he will review an issue in the Finance Bill that will detrimentally affect medical card holders and GPs regarding GMS contracts and agree to include text to rectify the situation (details supplied). [50373/23]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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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, to 31 December 2023. Revenue have published supplementary guidance on this matter on 10 November which is available at the link below:


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.

Section 58 of the Health Act, 1970 authorises the HSE to enter into a contractual relationship with individual GPs for the delivery of services. 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).

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. 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.

Last week, I signalled my intention to bring an amendment at Report Stage of 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. The proposed amendment will also provide that any Professional Services Withholding Tax credit may be claimed by the partnership under such instances. Subject to Government approval and the assistance of the Office of the Attorney General, I will provide further detail when I introduce the amendment next week.

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. The core issue concerns the contractual arrangements involving GPs, and the Minster for Health has confirmed that the Strategic Review of General Practice, which is now underway, will examine the current contractual arrangements for the GMS, as well as other contracts, and will propose measures necessary to modernise them.


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