V16.910 VAT—liability of essential and advanced services supplied in England and Wales under the NHS contract for community pharmacy
Information Sheet 4/06, March 2006
This information sheet explains how the VAT liability rules should be applied to essential and advanced services supplied by community pharmacies.
The new contractual framework for community pharmacy services in England and Wales came into effect on 1 April 2005. The framework requires community pharmacies to provide patients with certain services deemed to be essential. In addition, some contractors may provide advanced services.
The framework also enables Primary Care Trusts and local Health Boards to contract with pharmacies to deliver other, local enhanced services. This information sheet does not deal with enhanced services. Contractors requiring assistance in determining the liability of those activities should contact the National Advice Service (see section 14).
Although the framework came into effect on 1 April 2005, community pharmacy contractors were not obliged to provide essential services (or advanced services where appropriate) until 1 October 2005.
The framework applies only to England and Wales. It is likely that Scotland and Northern Ireland will be producing their own contracts for community pharmacy services in the future. We will provide separate guidance regarding those arrangements.
2 What is this information sheet about?
Whilst pharmacies will continue their long-established activity of dispensing prescribed drugs and medicines, some of the activities they are now required to undertake will be new. Furthermore, for some of the essential services, the arrangements for payment are not straightforward.
This guidance is provided to assist community pharmacy