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HMRC internal manual

VAT Health

The zero rate for dispensed drugs: background: qualifying goods supplied with medical care

All GPs in the UK can administer drugs at the time of treatment regardless of whether they are also NHS dispensing GPs. The professional services of a registered medical practitioner are exempt from VAT under item 1 to Group 7 of Schedule 9, and the House of Lords judgment in the case of Dr Beynon and Partners ([2005] STC 55) confirmed our view that personally administered drugs and medicines such as vaccines and injections are part of the doctor’s single supply of medical care. The doctors in this practice were dispensing GPs. The partners argued that, when personally administering medicines to a patient who was entitled to receive NHS dispensing services from them, the patient received separate supplies of exempt medical services and zero-rated dispensed goods. However, the House of Lords concluded that, in reality, the patient’s visit to the doctor for treatment was one transaction. They said it was essential, for practical reasons to have a rule which applied across the board to transactions of a certain kind. Accordingly, we consider this judgment also confirms the VAT treatment of diagnostic reagents, contraceptive caps, diaphragms and intra-uterine devices, and pessaries, where they are personally administered or fitted (‘immediately administered’ in Scotland) to the patient by the doctor at the time of treatment. The zero rate therefore does not apply to these goods.