Policy paper

VAT exemption for dental prostheses imports

Published 27 October 2021

Who is likely to be affected

• Registered dentists and other dental care professionals importing dental prostheses into the United Kingdom (UK)
• Registered dentists and other dental care professionals moving or supplying dental prostheses between Great Britain (GB) and Northern Ireland (NI)

General description of the measure

The measure introduces a VAT exemption for the importation into the UK of dental prostheses. It ensures supplies of dental prostheses by registered dentists and other dental care professionals continue to be exempt between GB and NI.

The changes will apply retrospectively from 1 January 2021.

Policy objective

The measure is designed to prevent price rises for dental prostheses in NI and to avoid potential differential VAT treatment of NI dentists and dental technicians compared to businesses in GB.

Background to the measure

The measure is being introduced to ensure equal VAT treatment of dental prostheses supplied within the UK, including between GB and NI.

The Northern Ireland Protocol means EU VAT rules continue to apply in relation to goods in NI and movements between GB and NI are technically treated as imports.

Supplies of dental services by registered dentists and other dental care professionals are exempt from VAT and therefore they cannot charge VAT for their services or recover any VAT they are charged. A similar exemption applies to dental technicians who make domestic supplies in GB and NI. The exemption also applies to dental prostheses. The exemption does not extend to imported goods.

The Northern Ireland Protocol means EU VAT rules continue to apply in relation to goods in NI and movements between GB and NI are treated as imports. This means that, following the end of transition period, in the absence of an exemption for imports, VAT would be due at the standard rate for dental prostheses supplied between GB and NI. However, businesses would not be able to recover it, potentially increasing prices for patients.

This measure is intended to remedy this unintended consequence of the Northern Ireland Protocol and is being retrospectively applied to ensure there is no gap in the fiscal position that existed prior to the end of the transition period.

Detailed proposal

Operative date

This measure will have retrospective effect and apply from the end of the transition period (11pm on 31 December 2020).

Current law

The current law is contained in the Value Added Tax Act (VATA) 1994:

• Section 31 of, and Group 7 of Schedule 9 to, VATA 1994 introduces the exemption for medical care.
• Paragraph 17(5) of Schedule 9ZA to VATA 1994 deals with the exemption for such acquisitions in NI from EU member States.
• Section 1(1)(c) of VATA 1994 deals with VAT on the importation of goods into the United Kingdom.
• Paragraph 3(2) and (4) of Schedule 9ZB to VATA 1994 sets out liability for VAT on movements between GB and NI.

Proposed revisions

Legislation will be introduced in Finance Bill 2021-22 to introduce a VAT relief for the exemption on final importation of dental prostheses into the UK. The Value Added Tax (Imported Goods) Relief Order 1984/746 will also be amended to provide relief.

Summary of impacts

Exchequer impact (£m)

2021 to 2022	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027
negligible	negligible	negligible	negligible	negligible	negligible

This measure is expected to have a negligible impact on the Exchequer.

Economic impact

The measure is not expected to have any significant economic impact.

The terms used in this section are defined in line with the Office for Budget Responsibility’s indirect effects process. This will apply where, for example, a measure affects inflation or growth. You can request further details regarding this measure at the email address listed below.

Impact on individuals, households and families

There is expected to be no impacts on individuals as this measure only affects businesses. The measure is expected to ensure that there is no price increase faced by dental patients. There is expected to be no impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that there will be impacts on groups sharing protected characteristics.

Impact on business including civil society organisations

This measure is expected to have a negligible impact on a minority of dental practises in the UK by changing their liability of goods on imports from standard rating to exemption. This measure will mainly impact on NI and (as it is retrospective to ensure the same treatment continues pre and post the transition period ending) impacts on business are negligible.

One-off costs will include familiarisation with the changes and could include, updating software to enable the transactions to be treated as exempt. A further one-off cost could include contacting suppliers to ensure they meet the required conditions.

Continuing costs could include providing a copy of a declaration of entitlement to exemption to suppliers with every shipment. Customer experience is expected to remain broadly the same as this measure doesn’t alter how dental practises interact with HMRC.

Operational impact (£m) (HMRC or other)

Costs to HMRC of implementing this change are expected to be negligible.

Other impacts

Other impacts have been considered and none has been identified.

Monitoring and evaluation

The measure will be kept under review through communication with affected taxpayer groups.

Further advice

If you have any questions about this change, please contact Joyce Schultz (VAT reliefs Policy team) on Telephone: 03000 594664 or email: joyce.henningham@hmrc.gov.uk.