Accommodation tax points: standard-rated prescription products: background
Some prescription goods are liable to VAT at the standard rate. These include items such as stoma and continence care products which, in some cases, are supplied by businesses who are not retail pharmacists. Typically these are companies who deliver from depots direct to patient’s homes. Payment for the goods is later claimed from the Prescription Pricing Authority (PPA) based on the prescriptions collected from the patients and submitted to the PPA each month.
The tax point occurs when the goods are delivered to the patient. However, the supplier is unaware of the actual value of the supplies until notified by the PPA (on Form FP47(A)) sometime during the following month. Under the normal rules the tax point cannot be delayed until payment is received from the PPA.
To overcome this problem suppliers may apply for an accommodation tax point under section6(10)(b) of the VAT Act 1994 (see VATTOS2245) as a result of which the date of receipt of the FP47(A) notification becomes the tax point.