In this second blog, we expand further on the healthcare sector and discuss developments this sector has seen over the last years. We’ll focus on the impact that Brexit and legislation have had on this specific sector. The insights from this blog series come from our latest Healthcare Sector Report, in which you can find more in depth information and useful advice regarding the healthcare sector.
In this second blog, we’ll focus on the impact that Brexit and legislation have had on the healthcare sector.
Impact of Brexit
The transition period outlined by Brexit ended on the 31st December 2020. This marks a meaningful and impactful date for the healthcare industry and is the beginning of a new era.
Like many sectors, the healthcare sector is deeply affected by the end of the transition period. When Brexit was stipulated at the end of December 2019, there was a rapid response to preparing the NHS and the social healthcare programs for any repercussions from Brexit. Initial fears within the healthcare sector mimicked many of those in other sectors: how will trade, imports, and labour be handled in the post-Brexit UK?
The international standing of the UK and how the UK builds trade agreements will greatly impact how the medical and healthcare sector will need to proceed. A few of the potential changes include:
- The structure of the personnel in the healthcare sector is bound to change with as much as 6% of employed individuals being EU nationals (of the 1.9 million people employed by the UK health force in 2018, 6%—or 114,000 people—were EU nationals).
- Potential skill shortages may continue to spread the NHS and Irish healthcare services thin, especially during the COVID-19 pandemic.
- How medical equipment from the EU is brought into the UK, coupled with VAT and other new taxes.
- How medicine from the EU (or other international sources) is brought into the UK.
- New regulations for medical technology due to political turmoil or governmental shifts.
- Massive changes for UK and Ireland trade and border traffic.
- Prices for both goods and services (both healthcare and not) will fluctuate as deals fall into place.
Legislation, fiscal, tax, VAT
VAT – Issues for the sector fall into two categories:
- The impact of the tax on the management of the business itself – how does the business manage its cash flow in the VAT context? How does it ensure its subcontractors or additional hires are not exposed to failure from poor VAT compliance and adversely affect patient treatment?
- How can healthcare form a VAT strategy to benefit both the practice and its patients? VAT responsibility depends on the type of procedures or services being provided, but if the service matches the practice’s certifications and is intended to help maintain, protect, or restore a patient’s health, the service may be exempt from VAT. Issues arise with boundary cases, such as a practice that performs services that may or may not be included in their certification.
With the backdrop of COVID, the needs of the healthcare sector have needed to flex dramatically as patient treatment changed and equipment requirements also shifted to accommodate this change. New techniques, practices, and services developed in response to the virus may fall on the line of uncertainty regarding VAT and other fiscal matters and create complications for how to comply with taxation regulations.
Note for Ireland: This holds true for Ireland as well. Though not experiencing the same political reform, new techniques, technology, and practices may raise questions about tax and regulations.
Flexibility and understanding are key
As the Moderna and Pfizer-BioNTech COVID-19 vaccines begin to circulate, again new situations will continue to arise which may have unclear tax implications, and the best way to approach these situations is to educate yourself on which aspects of the healthcare industry may face VAT and tax implications, even if they do not apply directly to your field of practice. Constant changes in all sectors, which has been a defining trait of 2020 and the beginning of 2021, warrants the need for flexibility and understanding.
To make matters more confusing, Brexit poses as an additional influence in how VAT and tax will evolve as the healthcare sector experiences the ripple effects of 2020. New regulations, changes in trade, and sector adaptation will continue to make small but consistent changes to how the industry operates and interacts with fiscal policy. The best mindset to adopt, similar to one the construction industry needed to adopt, is flexibility. Being prepared to adapt to changes will continue to be important as the aftershocks of Brexit and COVID-19 continue to berate all of the UK and Ireland’s industries. One thing to keep in mind is if you made it through 2020, then maintaining the flexibility you developed in order to get through can only help.
The best mindset to adopt, similar to one the construction industry needed to adopt, is flexibility.
Keep an eye on our inspiration page, more blogs on the healthcare sector are yet to come! In the upcoming blogs, we’ll talk about environmental tax, skill shortages, cash flow and we’ll share with you a useful checklist for improving healthcare and how to best prepare for the future.
Xeinadin supports businesses in the healthcare sector. Visit our healthcare page for more info and an overview of the services we offer, or contact us directly if you need advice from one of our local business advisors.
Do you want to read our full Healthcare Sector Report? You can download it for free!