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HMRC internal manual

VAT Health

Doctors: Clinical trials

Doctors may become involved in the trialling of new drugs at various stages of the process. To determine liability, you need first to ascertain the precise details of what is being supplied, and then determine whether the supply is essentially of an analytical testing service, or whether it comprises significant elements of medical care performed by registered medical professionals.

Usually, when a company conducts a clinical trial to ensure the efficacy of a new product, it makes what is essentially an analytical testing service. Typically, the drugs will be distributed to patients who have agreed to trial them and then samples of those patients’ blood or urine will be analysed by a testing company which has had little or no contact with the patients themselves. In this situation the supply must be standard-rated, because a registered medical practitioner - even if involved in the supply - is not performing services that satisfy the criteria at paragraph VATHLT2010.

But it may be that, in some cases, the company undertaking the clinical trials will also care for the patients. The company’s medical practitioner will have a far greater degree of contact with the patient and will for example, consistently and regularly check the patient to ensure that they are suitable for the trial, administer the drugs to the patient, monitor the patient for any adverse side effects, and provide any treatment necessary. In such situations, the services of the medical practitioner will be exempt.

GPs do not have involvement with new drugs until the medication reaches the post marketing surveillance stage. At this point, following examination and diagnosis as part of their normal provision of healthcare, the GP may consider that the newly available drug is the most appropriate treatment for their patient. In these circumstances, after prescribing the drug for that patient’s use, the GP is obliged to monitor the patient’s condition. This monitoring is undertaken for therapeutic reasons and is exempt medical care.