New VAT charges for medical services
25th May 2007

Chartered Accountants Naylor Wintersgill are highlighting the need for doctors and dentists to charge VAT on certain services as the result of new legislation which came into force on the 1st May 2007.

As the result of a ruling by the European Court of Justice, which stated that UK VAT exemptions for medical services were too wide ranging, HM Revenue and Customs has stipulated that VAT must now be charged on all services which do not have a diagnostic or health value to the patient.

Examples of services which will now be subject to VAT include certain clinical trials, issuing letters, providing access to medical records, some certification services and cosmetic treatments which are not health related.

Practices will need to register for VAT if the value of taxable supplies exceeds the VAT registration threshold of £64,000. For partnerships of doctors or dentists, the threshold applies to the practice as a whole and not to each partner.

Vaughan Houldsworth, Tax Partner at Naylor Wintersgill commented,

‘The changes have proved largely unpopular with the medical professions as they entail further administrative duties and there is a certain amount of ambiguity as to what is VAT chargeable and what isn’t. We would advise any GP’s, dentists or practice managers who are unsure about the legislation, or whether the practice needs to register for VAT, to consult their financial advisor.’

Naylor Wintersgill has an extensive client base within the medical and healthcare sectors including doctors, locums, dentists, pharmacists, nursing and medical care homes, consultants and health insurers.