V16.812 VAT—NHS dispensing doctors

Part V16 Forms and other HMRC material

V16.812 VAT—NHS dispensing doctors

Information Sheets

V16.812 VAT—NHS dispensing doctors

VAT Information Sheet 6/95, 1 April 1995

This information sheet explains changes to the zero rate for prescribed drugs which take effect from 1 April 1995. From that date the supply of NHS drugs or appliances, by GPs authorised or required to provide NHS pharmacy services (dispensing doctors), can be zero-rated for VAT purposes. This amplifies the existing zero rate for prescribed goods dispensed by pharmacists. It resolves VAT liability difficulties which arose following a change in the VAT status of GPs in March 1993. The change addresses concerns expressed by NHS dispensing doctors about the anomalous VAT treatment of the drugs they dispense.

1 Background

Prior to March 1993 GPs were treated for VAT purposes as providing non-business health care as part of the NHS. This meant that all GPs' NHS activities were outside the scope of VAT. A number of GPs challenged this arrangement. Many considered that they were disadvantaged by it. Following representations from the medical profession Customs and Excise agreed to end this long-standing arrangement. GPs are now treated for VAT purposes as independent professionals in business on their own account.

2 Law

The Value Added Tax (Supply of Pharmaceutical Goods) Order 1995 adds a new item 1A to VATA 1994 Sch 8 Group 12 (Drugs, Medicines, Aids for the Handicapped, Etc). The new item zero rates—

“1A     The supply of any goods in accordance with a requirement or authorisation under—

(a)     regulation 20 of the National Health Service (Pharmaceutical Services) Regulations 1992;

(b)     regulation 34 of

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