Revenue and Customs Brief 2 (2020): VAT zero rating for the dispensing of prescribed drugs
Published 12 March 2020
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Purpose of this brief
This Revenue and Customs brief announces a change to UK VAT law to allow the zero rating of the dispensing of drugs prescribed by appropriate practitioners from the European Economic Area (EEA) and Switzerland. This is as a result of changes introduced in The Human Medicines Regulations 2012.
These changes apply to the whole of the United Kingdom.
Who needs to read this
Pharmacists in the United Kingdom and their VAT advisers.
Background
At present, drugs and other qualifying goods dispensed by a registered pharmacist to an individual for their personal use on the prescription of an appropriate practitioner benefit from the zero rate of VAT.
Medical doctors, dentists and other health professionals authorised under the Human Medicines Regulations 2012 are deemed to be appropriate practitioners for VAT purposes. Prescriptions from health professionals from the EEA and Switzerland currently do not fall within the zero rate when dispensed by UK pharmacies.
These changes align the UK’s VAT legislation with the Human Medicines Regulations 2012 which is administered by the Department of Health and Social Care (DHSC) and allows prescriptions written by EEA health professionals to be dispensed by UK pharmacies. They extend the VAT zero rate to such private prescriptions for the first time subject to the same conditions as currently apply to UK prescriptions.
The VAT changes
(a) On 1 April 2020:
Note (2B) to Group 7 of Schedule 8 to the VAT Act 1994 defines an appropriate practitioner by reference to a list. With effect from 1 April 2020 that list is to be extended to include suitably qualified EEA health professionals. These are defined in regulation 213 of the Human Medicines Regulations 2012 and include qualified prescribers in member states of the EEA or in Switzerland.
As well as member states of the European Union, the EEA includes Iceland, Norway and Liechtenstein. See the full list of EEA countries.
These new rules will apply from 1 April 2020 until the end of the transition period (31 December 2020 - see under 4(b) below).
(b) At the end of the transition period following the UK’s exit from the EU:
Regulation 213 of the Human Medicines Regulations 2012 will be amended with effect from the end of the transition period following the UK’s departure from the EU. The amendments will introduce a list of ‘approved countries’ and only those who are suitably qualified to prescribe from these countries will be able to continue to do so in the UK. This list will be curated by the DHSC. Following these amendments, there will be a further consequential change made to Note (2B) to Group 7 of Schedule 8 to the VAT Act 1994.
More information for these amendments and the list of recognised qualifications for approved countries will be published on the gov.uk website soon.
More information
For more information on the VAT treatment contact the VAT helpline.
For more information on the system for recognising qualifications after the end of the transition period see the DHSC website.