Mary Lou McDonald (Dublin Central, Sinn Fein)
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348.To ask the Minister for Finance to provide an update on any potential resolutions to a matter raised by a group (details supplied) based in County Dublin; and if he will make a statement on the matter. [32088/24]

Róisín Shortall (Dublin North West, Social Democrats)
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375.To ask the Minister for Finance if he will meet with a charity regarding the tax treatment of its general practice model (details supplied); and if he will make a statement on the matter. [32776/24]

Jack Chambers (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 348 and 375 together.

My Department, the Department of Health 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:

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, section 1008A was introduced to the Taxes Consolidation Act 1997 (TCA). 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 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 in respect of the business referenced by the Deputies. It is also limited only to income arising from GMS and certain ancillary medical services income.

When the provision was introduced in the Dáil during Report Stage of the Finance (No. 2) Act 2023, the then Minister for Finance noted that it is expected to resolve some, but not all, of the issues arising. For example, in respect of the situation referenced by the business in the details supplied by Deputy Shortall, the Department of Health have confirmed that the nomination of a bank account other than that of the contracted GP for payment of income under the GMS contract does not change the contractual relationship in any way. As such, the legal position remains that the individual GP is the person being contracted and therefore paid for the GMS contract, regardless of who owns the bank account into which they have nominated to receive the GMS income.

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. While I am conscious of the difficulties being experienced by GP practices, I must be cognisant of existing legislation, contract law and the Minister for Health’s remit in respect of the surrounding policy.

In response to Deputy Shortall's question, it would not be appropriate for me to meet with the business in question as the core issue concerns the contractual arrangements between individual GPs and the HSE. As such, I have referred the matter to the Minister for Health for his consideration. I would note that 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.