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VAT and the NHS

The NHS is moving towards commissioning groups (controlled by GPs) and community care. My company is VAT registered and sells products into the NHS. Unfortunately we are a small player and I don't understand how VAT works in the NHS and was hoping to get a primer on this topic, particularly covering:
- Primary care trusts (I know they're being disbanded but I need the context)
- GPs (they're role is expanding, will the VAt rules be changing for them? What are the rules right now?)
- Foundation trusts (every hospital will become a foundation trust. How does the VAT situation change from being an acute trust to being a foundation trust? How is VAT dealt with in foundation trusts?)

Are the rules changing or does the new structure provide any new benefits? Does the increase to 20% affect the NHS at all?
Any help in this area would be very gratefully received and wil help me to understand whether I need to hire a tax consultant in this area.

Thank you
 

HW

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Can be complicated...

VAT on health services can be complicated but sometimes not - many NHS GPs are not VAT-registered at all.

Broadly, a GP practice is 'contracted' to provide services on behalf of the relevant local PCT - and most of these services are VAT exempt (those that are primarily concerned with the health and welfare of the patient). Some items (providing medical reports, passport application countersignatures and so on) are standard rated and if income from such areas goes over the threshold then they have to register and carry out partial exemption. This is fairly rare and a non-dispensing practice is usually unencumbered with VAT issues.

If a practice is dispensing (ie has a pharmacy attached) then it is often VAT registered but the relevant VAT classifications vary depending on the type of drug/service being provided. Again partial exemption is often used.

These links may be useful:-

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000126

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000121

(They're Public Notices 701/31 and 701/57 on Health Institutions and Health Professionals if the links don't work)

This can be a complicated area though and the above is merely the tip of the iceberg! You may wish to Google a few medical specialist accountants who should have useful info and links. Or the AISMA - Association of Medical Specialist Accountants).

In terms of how it is going to work under the new proposals post-PCTs, I really don't know as yet in detail terms, but I suspect the rules will be much the same - ultimately the GP will still be providing the 'end service', just via a different 'contractor' setup.

 

 

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Thank you

Thanks "Cupcake", that was really very helpful

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