Under the VAT rules, certain medical equipment can be zero-rated where the equipment is a medical or surgical appliance that is designed solely for the relief of a severe abnormality or a severe injury, and has been purchased for the personal or domestic use of a person defined as ‘chronically sick or disabled’. This particular relief is not however available when the purchase is funded by an NHS body.
Zero-rating is however available for certain equipment purchased by an NHS body wholly from charitable funds.
Therefore, where NHS bodies make purchases of this nature from non-charitable funds, suppliers should charge VAT at the standard–rate (20%).
Generally speaking, there is no VAT recovery available for such products by NHS bodies under the contracted-out services (“COS”) rules and there is unlikely to be VAT recovery under business VAT rules. However, if the NHS body purchases maintenance, repair or support in respect of such products, VAT recovery under COS may be available subject to the normal conditions.