Implementation of VAT on Medical Services
From the 1st May 2007, VAT Liability may be incurred for certain medical services. The exemption will continue for all services where the principal purpose is the protection, maintenance or restoration of the health of the service user; primary healthcare provided both by the NHS and privately will remain VAT free.
VAT liability at 17.5% will be incurred where the purpose of a medical service is to enable a third party to decide on a course of action for example, Occupational Health pre-employment screening. HM Revenue and Customs has provided guidance on the services that continue to be exempt from VAT and these include health services provided under GMS, PMS, APMS, PCTMS, GDS and PDS contracts or pharmaceutical advice. The HMRC have produced a guidance note
regarding the changes to the VAT liability and a table
identifying the services provided by doctors and whether they will be liable for VAT following the 1st
If you are registered on a statutory professional register, whose taxable income exceeds £61,000 (the current VAT registration threshold); it is necessary to register for VAT. As a result of the changes a practice’s taxable income may exceed the threshold and registration will be necessary. Professional advice should be sought from a specialist medical accountant to prepare for the changes. The BMA recommends that medical professionals act promptly to prepare for the changes and has provided several documents to assist with the preparation.