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HMRC internal manual

VAT Valuation Manual

Specific applications: Opticians and sellers of hearing-aids: background

This guidance supplements that in VATHLT2160 Opticians and VATHLT2370 Hearing Aid Dispensers. This is supplemental to the guidance in VATVAL12300. It now also covers contact lens and related services.

Discussions were held with representatives of several opticians’ trade bodies about suitable apportionment methodologies and partial exemption. Agreements have been reached between HMRC and several opticians trade bodies about suitable apportionment methodologies and partial exemption. Further guidance about these can be found in  VATVAL12400.

The sale of spectacles was exempt until 1988 when the European Court of Justice ruled that the UK’s VAT exemption for medical care could not extend to the sale of spectacles. The necessary legislative changes were introduced on 1 September 1988, but the supply position was not entirely clear. Many opticians apportioned their income arising from the sale of spectacles, claiming that some of the price paid for the standard-rated spectacles should be exempt as payment for the professional medical services of dispensing opticians. To ensure uniformity, HMRC ruled that any dispensing services were subsumed within a single standard-rated supply of spectacles. Consequently, at that time HMRC policy was that apportionment was not appropriate.

This policy changed in 1995 following two High Court cases. Further information on this and subsequent changes are available at VATVAL 12420.