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HMRC internal manual

VAT Valuation Manual

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HM Revenue & Customs
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Specific applications: Opticians and sellers of hearing-aids: background

This guidance supplements that in VATHLT2160 Opticians and VATHLT2370 Hearing Aid Dispensers and incorporates Information sheet 8/99 which was issued to cover the apportionment aspect of supplies of spectacles and medical services by opticians. This is supplemental to the guidance in section 0 of this guidance. 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. These resulted in a Business Brief (19/95) and a briefing note for departmental use covering both apportionment and partial exemption. As a result of subsequent discussions between representatives of opticians and departmental colleagues further guidance on apportionment methods was provided in Information sheet 8/99. Part of the briefing note dealing with apportionment of outputs and Information Sheet 8/99 has been reproduced in paragraph Error! Reference source not found.

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. Apportionment was not therefore appropriate. This has been reproduced in full on page VATVAL 12420.