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HMRC internal manual

VAT Government and Public Bodies

Government departments and health authorities: Contracted Out Services (COS) Headings: COS Heading - Laboratory services

This Heading allows recovery where an NHS body or government department has contracted out its laboratory services. Laboratory services are defined as services of conducting scientific experiments, tests and investigations whether in a laboratory building or via a technological process.



  • Drug testing
  • Forensic testing
  • Managed laboratory services



  • Stand-alone supplies of laboratory consumables for example, reagents, chemicals and test tubes which are supplies of goods
  • Separate lease/hire of laboratory equipment


Additional information

The supply of laboratory pathology services that directly relate to the provision of healthcare for individual patients is exempt from VAT and thus there is no VAT to recover. This applies to all businesses that are state-regulated and supply laboratory pathology testing services, whether they supply the services to the NHS or to independent hospitals.