News Item
VAT on Medical Services
Following the European Court of Justice decision in the case of Dr Peter d’Ambrumenil and Dispute Resolution Services, the VAT exemption for certain health services will be changing with effect from 1 May 2007.
The court held that the exemption is restricted to “medical care” which is defined as those services intended principally to protect, maintain or restore the health of an individual. Therefore, primary health care provided through either the NHS or the private sector will remain exempt from VAT.
Medical services which are primarily for the purpose of enabling a third party to take a decision – many of which are currently exempt from VAT under UK law – will no longer be exempt and will be taxable supplies, at the standard rate of 17.5%, with effect from 1 May 2007.
It is therefore important that the level of income relating to any work that will now be standard rated i.e. Medico-legal etc, is monitored to ensure that the obligation to register for VAT is fulfilled if the current registration threshold (£64,000) is exceeded. Please note, you are liable to register for VAT at the end of any month if your taxable supplies in the 12 months ended on the last day of that month have exceeded £64,000 or your taxable supplies in the next 30 days are expected to exceed £64,000.
If you wish to obtain more information on the new rules relating to VAT on Medical Services, you can contact either Christopher (christophermccandless@johnston-kennedy.com) or Patrick Towe (patricktowe@johnston-kennedy.com) of our Medical Sector Team.
Further information can also be found at www.hmrc.gov.uk/briefs/exempt-med-services.htm.