Neasa Hourigan (Dublin Central, Green Party)
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115. To ask the Minister for Finance if he will ensure that changes to tax requirements under Section 1008A of the Taxes Consolidation Act 1997 for general medical practitioners under general medical services scheme contracts (limiting partnerships to other GPs only) will not adversely damage existing non-profit practices, where the partner is a charitable organisation, forcing them to close in deprived urban areas; and if he will make a statement on the matter. [37437/24]

Jack Chambers (Dublin West, Fianna Fail)
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My Department, the Department of Health 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.

The core issue concerns the contractual arrangements involving GPs; the Health Act, 1970 authorises the HSE to enter into a contractual relationship with individual GPs for the delivery of GMS services. 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 Tax Appeals Commission determination issued in January 2022.

It was in this context that Revenue issued guidance last year to clarify the position and allowed GPs a period of time, up to the end of 2023 to adjust their arrangements. Revenue's guidance clarifies that 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. This legal position does not change because a GP is a contracted employee of a medical practice and has nominated their GMS income to be paid into the bank account of a medical practice rather than into their personal bank account.

The Deputy has referenced section 1008A of the Taxes Consolidation Act 1997 (TCA), which was introduced in Finance (No. 2) Act 2023. Section 1008A 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. It is important to note that this treatment applies only in the case of partnerships involving partners who are all individuals and medical practitioners. Section 1008A does not operate to treat GMS income of an employee of a partnership as income of the partnership, nor does it apply to, or change, the tax situation for doctors who are employees of a partnership or other arrangement, including corporates (including not for profit entities). It is also limited only to income arising from GMS and certain ancillary medical services income.

Section 1008A TCA is being perceived as a change to the legal position for all GP practices, which is not the case. The provision did not change the underlying legal position that the individual GP is the chargeable person as regards income arising under the GMS contract.

When the section was introduced, it was noted that it is expected to resolve some, but not all, of the issues arising from the GPs' contractual arrangements. This is because there are a number of business arrangements and models in the GP sector, including partnerships, companies, employees and employers. It was further noted, therefore, that the Department of Health had agreed to this approach and had confirmed that the Strategic Review of General Practice, which is currently underway, would examine the relevant HSE contracts and propose measures necessary to modernise them.

Although I am conscious of the difficulties being experienced by GP practices, I must be cognisant of existing legislation and contract law. There is currently no legal basis for Revenue to treat income belonging to an individual contracted GP as income of another person, or incorporated charity. For this reason, the transitional arrangement which Revenue put in place until end-2023 could not be extended beyond that date.

As the core issue concerns the contractual arrangements between individual GPs and the HSE, it would not be appropriate for my Department to propose legislation which would treat income belonging to an individual contracted GP as income of an incorporated charity. As such, I have referred this matter to my colleague, the Minister for Health, for his consideration and hope that an appropriate solution can be found.