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.
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.
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