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HMRC internal manual

VAT Charities

Medical and scientific equipment (“relevant goods”): Services that qualify for relief

Computer Software

Computer software qualifies for relief only if it is solely for use in medical research, diagnosis or treatment. It should be noted that this is a more restrictive relief than for computer hardware. It is included in the relief by Note (10).

Installation, repair and maintenance of relevant goods

The only other services that qualify for relief in connection with donated medical and scientific equipment are those listed in Group 15 Item 6, namely the repair and maintenance of relevant goods owned by an eligible body. You may encounter a situation where an eligible body may argue that the supply of some services are essential if the goods are to be used and therefore should be covered within the zero-rating.

Only if the supply is one of installed goods will all elements of the supply be treated the same way. Some examples of the types of supply that would fall into this category are:

  • where the price of a computer includes the connecting up to a network, or
  • equipment such as medical scanners need to be installed and tested before the supply is complete.

If the service is separate from that of the qualifying goods, even if it is essential, zero-rating will not apply to the service element. The type of supply that would fall into this category would be the conversion of a building to house a piece of equipment.

If the supply of services is made by a third party it will not be within the scope of the zero-rating.

The different treatments are illustrated in the following example:

Example: An NHS Trust purchased a new scanner from ABC Ltd. The scanner was to be assembled on site by the supplier. It was necessary to remove a wall from the room in which the scanner was to be housed so that the amount of space available for the Trust’s staff to work in was maintained. The supplier removed the wall two weeks prior to the delivery of the scanner. And, after the scanner was installed, a separate cleaning company brought the room up to the required standard of cleanliness.

Providing the funding criteria were met, relief was available to the Trust under Group 15, Items 4 to 7 for the supply and assembly of the scanner.

The removal of the wall and the cleaning service were standard-rated, as they were completely separate services from that of the qualifying goods.