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Private firms may be made exempt from corporation tax

Review is considering exemption to make ‘fair playing field’ for private firms for work provided for the NHS

Ingrid Torjesen

Monday, 14 January 2013

Private firms such as Virgin Care could be made exempt from corporation tax if they are contracted to do work for the NHS under a review being conducted by the foundation trust regulator Monitor, The Sunday Telegraph suggests.

The aim of the review is to rectify the problem of what is considered “unfair playing field” in health care between private and public organisations.

Currently public sector hospitals do not pay corporation tax and VAT on supplies, whereas private companies undertaking the same work do.

One source told the Sunday Telegraph that the draft proposals were sympathetic to the concerns of the private firms and the paper reported that many private companies believe the regulator would be right to introduce a tax exemption.

The review entitled Fair Playing Field is being conducted at the request of the Secretary of State for Health. Its final report, which is expected shortly, will include recommendations to Government and other regulators as to how any differences in the treatment of providers of NHS funded care could be addressed. 

Last week it was revealed that more than 100 private firms will be paid by the NHS to treat patients as part of a major expansion of the private sector role in the health service. The services provided will include physiotherapy and MRI scanning.

But a report produced by former health secretary Andrew Lansley, said that currently private sector providers face costs “about £14 higher for every £100 of cost relative to an NHS acute provider.”

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