The zero rate for dispensed drugs: background: concession for NHS prescriptions
This concession appears at section 3.30 of Notice 48.
- This concession applies in relation to a supply of goods which, apart from Note (5A) to Group 12 of Schedule 8 to the VAT Act 1994, would fall within Item 1 of that Group, when -
1. the goods supplied are dispensed to an individual for his/her personal use while he/she is an inpatient or resident or while he/she is attending a relevant institution which is a hospital or nursing home; 2. the goods are ordered in accordance with section 41 of the National Health Service Act 1977, section 27 of the National Health Service (Scotland) Act 1978 or Article 63 of the Health and Personal Social Services (Northern Ireland) Order 1972; 3. the goods are dispensed in accordance with the National Health Service (Pharmaceutical Services) Regulations 1992, Schedule 1 to the National Health Service (Pharmaceutical Services) (Scotland) Regulations 1995 or the Pharmaceutical Services Regulations (Northern Ireland) 1997; and 4. the person dispensing the goods is paid for doing so by - 1. the Prescription Pricing Authority; 2. the Prescription Information and Pricing Services Division of the Welsh Health Common Services Authority; 3. the Pharmacy Practice Division of the Common Services Agency; or 4. the Central Services Agency.
- Where this concession applies, the supply may be treated as if it were a zero-rated supply.
- The Commissioners may withdraw or restrict the application of the concession if they have reasonable cause to believe that it is being abused.
Accordingly, we accept that prescribed qualifying goods are dispensed for an individual’s personal use when:
- The goods are ordered from a community pharmacist by a GP or GDP in the usual way (currently by using a FP10 prescription form);
- the goods are dispensed in accordance with the NHS regulations governing community pharmacists; and
- the pharmacist is reimbursed by one of the NHS authorities that pay for community pharmacy services.