HMRC have concluded their review of the VAT liability of certain medical services following a consultation process and have issued Revenue & Customs Brief 06/07 detailing changes to the medical exemption. These will come into place on 1 May 2007.
The VAT changes are likely to impact mostly upon certain commercial, non-NHS activities undertaken by GP practices, doctors and consultants as providers of affected services and; insurance companies, the legal profession, employers and the public sector as recipients of the affected services.
The statutory healthcare activities undertaken by NHS Trusts and PCTs are not affected by the new rules; these remain outside the scope of VAT. Statutory supplies of medical records also remain outside the scope of VAT.
Non-NHS medical services by NHS organisations are however potentially affected. If the principal purpose of the medical service is the protection, maintenance or restoration of the health of an individual then the services will continue to be exempt from VAT.
Medical services which are primarily for the purposes of enabling a third party to decide a course of action will be subject to VAT. This appears to affect mainly items such as witness/testimony reports, medicals for certain fitness certificates and some occupational health services.
If you undertake these types of activities and require assistance in determining the correct VAT liability in light of the new rules, please contact us.