Róisín Shortall (Dublin North West, Social Democrats)
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184.To ask the Minister for Finance to respond to matters raised in correspondence (details supplied); if arrangements can be made to facilitate general practices operated by registered charities, given the immediate implications of not finding a resolution; if he will urgently engage with the Revenue Commissioners in respect of this matter; and if he will make a statement on the matter. [25052/24]

Michael McGrath (Cork South Central, Fianna Fail)
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My Department and Revenue have, for some time, been aware of issues which arose 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.

To clarify the correct tax treatment of GMS income under tax legislation, Revenue issued a guidance note to tax practitioners through the Tax Administration Liaison Committee in July 2023. That guidance confirmed there would be a transitional period until 31 December 2023 for compliance with existing tax law. That period has not been extended. Revenue published supplementary guidance on this matter on 10 November 2023, which is available at the following link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-01-15.pdf

Although the guidance was widely reported as a tax change, it did not, in fact, introduce a change to the tax treatment of GPs. Instead, it simply clarified the existing legal and administrative position.

In accordance with Section 58 of the Health Act 1970, a GMS contract is between the HSE and an individual GP. 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. The position does not change because a GP treats their GMS income as income of a medical practice.

Following on from that fact, under the legislation, there is no legal basis for Revenue to treat income arising under a GMS contract entered into between an individual 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.

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 also the specified person for the purposes of Professional Services Withholding Tax (PSWT), which means they are entitled to claim a credit for PSWT deducted by the HSE on GMS payments.

However, as part of Finance (No. 2) Act 2023, I introduced Section 1008A of the Taxes Consolidation Act 1997. This new section provides that, where individual GPs enter into contracts with the HSE to provide certain medical services and provide those services in the conduct of a partnership profession with other individual GPs, the income from those services can be treated for income tax purposes, to be that of the partnership, where a joint election is made.

Section 1008A TCA 1997 has been effective since 1 January 2024. However, it only applies in the case of individual doctors who operate in partnerships with other individual doctors. It does not apply to, or change, the tax situation for doctors who are employees of a corporation or other arrangement, such as the GPCareForAll model. It is also limited only to income arising from GMS and certain ancillary medical services income.

The core issue concerns the contractual arrangements involving GPs. 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, it would not be appropriate for tax legislation to seek to accommodate all contracts and business practices in the sector. As such, the Minister for Health has confirmed that the Strategic Review of General Practice, which is underway, will examine the relevant HSE contracts and propose measures necessary to modernise them.