Marie Sherlock (Dublin Central, Labour)
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269. To ask the Minister for Finance the changes he plans to make to the Finance (No. 2) Act 2023 that will allow medical charities operating GP practices to continue on a sustainable basis without recourse to emergency funding streams from the HSE. [52789/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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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.

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 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, there is no legal basis 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, therefore, a chargeable person as regards income arising under that contract and should report such 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.

This treatment was confirmed by a decision of the Tax Appeals Commission (TAC) in 2022. This is available to review on the TAC website, reference 01TACD2022, available at the following link: www.taxappeals.ie/en/determinations

Following this decision, and 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. Revenue published supplementary guidance on this matter on 10 November 2023.

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 legal and administrative position under existing law.

To allow GPs and medical practices time to make any necessary adjustments to their arrangements to comply with the law, the guidance confirmed that Revenue would, as regards certain arrangements, delay enforcing strict adherence to the correct legal position until 1 January 2024. That period has not been extended. A GP who holds a GMS contract, as a chargeable person as regards income arising under that contract, should, from 1 January 2024, report such income under the self-assessment system. The exception to this is a GP to whom section 1008A of the Taxes Consolidation Act (TCA) 1997 applies.

Finance (No. 2) Act 2023 inserted section 1008A into the Taxes Consolidation Act 1997. The section provides that, where individual GPs enter 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 as that of the partnership where a joint election is made. Revenue guidance has been updated to take account of this: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-01-15.pdf

Section 1008A TCA has been effective since 1 January 2024. 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.

The section 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 arrangements, such as in respect of the business referenced by the Deputy. It is also limited only to income arising from GMS and certain ancillary medical services 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.

As the core issue concerns the contractual arrangements between GPs and the HSE, the matter was referred to the Minister for Health for consideration. I would note that the Department of Health and the HSE have advised that they value the work of medical charities operating GP practices and that they have engaged with them on potential solutions to ensure that they can continue to deliver their services on a sustainable footing and in line with all relevant legislative provisions, including existing tax law.