V6.205C VAT recovery and practical points for doctors and dentists
VAT registration for doctors and dentists
As the majority of services provided by GPs and dentists are exempt from VAT, they are not normally required to register for VAT. However, as discussed in V6.204 they may also have taxable income streams. Registration is addressed in Division V2.1. Doctors and dentists not exceeding the VAT registration threshold may nonetheless choose to register voluntarily in order to benefit from some VAT recovery. For example, dispensing doctors wishing to recover VAT incurred on drugs that will be dispensed by the practice are required to register for VAT even though the dispensing on prescription of the drugs is zero-rated.
VAT recovery for doctors and dentists
As noted above, doctors and dentists primarily make exempt supplies and will hence typically have a very limited recovery entitlement even when registered for VAT. Where they do make a mixture of taxable and exempt supplies it will be necessary to consider partial exemption, for details of which see V3.460. It should be underlined that where a doctor or dentist has non-business activities (such as in the case of statutory work, see V6.204), VAT incurred in relation to those activities is likely to be irrecoverable as it is not 'input tax' for VAT purposes (see Notice 701/57/20, para 8.1). For detailed discussion of the meaning of input tax, see V3.402.
Construction and leasing of medical centres
There is a trend for larger practices to operate from medical centres owned by a
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