Should you charge VAT on PGD services?
Leyla Hannbeck, Chief Pharmacist at the NPA, stresses the importance of being aware of the Value Added Tax (VAT) status of relevant PGD services when pricing them
VAT status of medicines administered/supplied under patient Group Directions (PGDs)
PGDs do not amount to prescriptions because they are not written for an identified, individual patient. The supply of items under a PGD will, therefore, be taxable at the standard rate (20%), except that:
- If you provide medical treatment that is exempt from VAT, any charges for medicines/appliances administered or applied to your patient in the course of the treatment is also exempt (for example seasonal influenza or meningitis vaccinations)
- Any items that are separable from the treatment, ie, can be self administered, are not exempt from VAT and will usually be standard-rated (20%)
However, the supply of contraceptive products supplied under a PGD will be taxable at the reduced rate (5%). Examples of prescription-only medicines administered/supplied under a PGD are seasonal influenza vaccination, travel vaccines and medicines to treat conditions such as erectile dysfunction, obesity and hair loss.
Community pharmacy seasonal influenza vaccination Advanced Service (England)
For providing the 2015/16 community pharmacy seasonal influenza vaccination Advanced Service, pharmacists received an administration fee of Â£7.64 for vaccinating each patient plus an additional fee of Â£1.50 to cover costs incurred in the provision of the service. For the purpose of VAT liability, these two fees were exempt from VAT because it was a patient-specific vaccination service administered by a pharmacist.
Pharmacists were also reimbursed the cost of the vaccine at the basic price (list price) and received a VAT allowance (standard rate â€“ 20%) on the vaccine. This VAT payment needed to be declared on the normal VAT return as with any VAT standard-rated sales.
If the payment structure remains the same for the 2016/17 community pharmacy seasonal influenza vaccination Advanced Service, then the VAT liability will remain as above.
The NPAâ€™s â€œVAT liability on pharmacy goods and servicesâ€ resource is available from npa.co.uk.
It is advised that you seek expert advice from your accountant or a VAT specialist if more specific information regarding the VAT status of specific services is required, including advice on how to complete VAT returns. Please contact the local VAT office or the VAT helpline.
This is an extract from a Superintendent Update from the NPA. Sign up to receive updates at npa.co.uk/my-account.
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