NHS bosses f lout rules to swerve £140m in tax

Cash lost through loophole could pay for 6,000 extra nurses

‘Firms siphon off hundreds of millions’ ‘Hugely complicated task’

NHS trusts are flouting orders not to use tax avoidance schemes that cost the Treasury £140million a year, the Mail can reveal.

Under the loophole, temporary staff are employed by financial consultants and supplied to hospitals as ‘medical services’.

It means they are exempt from the 20 per cent VAT usually levied on agency workers. The consultancies providing the services are making huge sums from fees they charge hospitals they supply.

Campaigners say the loss in public money from these schemes would be enough to fund 6,000 extra nurses a year. The fees help bankroll a life of luxury for the firms’ bosses, with the founders of one company living in a mansion with pool and spa, racing sports cars at Silverstone and travelling by private jet for skiing trips.

In a letter sent to hospitals, seen by the Mail, the Department of Health branded the tax arrangements ‘a direct leakage from the health system’.

The scandal comes as one in 11 health service vacancies go unfilled, according to recent figures from watchdog NHS Improvement revealed one in 11 health service vacancies is unfilled. The Kings Fund think-tank warned the problem, which leaves the NHS short of 11,500 doctors and 42,000 nurses, risks becoming a ‘national emergency’.

Last night a Department of Health spokesman stressed that NHS organisations ‘should not enter into tax avoidance schemes under any circumstances’. Campaigners called on the Government to take urgent action to close the loophole.

Dr Iain Campbell, of the Independent Health Professionals Association, said: ‘It is outrageous that these firms are siphoning off hundreds of millions of pounds of taxpayers’ money. These funds should be spent on patient care, schools, and the police force – not private jets.’ Following freedom of information requests, Dr Campbell estimates that NHS trusts pay £700million a year to companies providing these schemes, costing the Treasury £140million in lost VAT. One of the biggest providers of the schemes, called ‘Direct Engagement’, is Cheshire - based Brookson, founded by Rick and Carolyn Nevinson, which last year enjoyed a 73 per cent rise in revenue to almost £130million.

The Nevinsons launched the firm in 1995 to offer tax planning and payroll services to contractors and freelancers. The company now works with 35 NHS trusts – including one which paid it over £3million during a five-year period for the schemes.

Department of Health finance director Chris Young wrote to hospitals last year to say he was aware of ‘tax advisers offering tax solutions to health bodies which, although legal, avoid the payment of tax for which that body has been funded’.

He added: ‘The fees chargeable to the tax advisers represent a direct leakage out of the health system and while at a local level there may be an immediate financial benefit, there is an overall net loss to the Exchequer.’

At least six NHS trusts signed up to Brookson after the letter was sent.

Others have been paying the company for years. Pennine Acute Hospitals NHS Trust in Oldham, Greater Manchester, has paid Brookson £3,142,019 since 2013. The firm sponsored the trust’s staff awards in 2017.

Mrs Nevinson, 51, is still a director at the company. Her husband resigned his directorship last year.

An HMRC spokesman said: ‘HMRC expects all businesses, including public bodies, to apply the tax rules correctly. Government guidance explicitly states public sector organisations should not engage in tax evasion or avoidance.’

A spokesman for Brookson said its services help the NHS ‘ save time and money’ in the ‘ hugely complicated task in scheduling and managing all of the locum staff that it needs each day.’

They stressed: ‘We have engaged with HMRC since the inception of our work with the NHS and we are confident that all of the services we provide are fully compliant with all relevant tax legislation and HMRC guidance.’