New VAT rules for doctors

Immediate release : Friday 27 April 2007 New VAT rules for doctors “just days away", says BMA

A  European Court of Justice ruling* amending the exemption from VAT for some non-NHS health services will be implemented on 1 May 2007. The ruling makes medical examinations or reports that are carried out for a third party subject to VAT at 17.5%.

Dr John Canning, Chair of the BMA Professional Fees Committee, said:

“All doctors need to be aware of the new rules. For the vast majority of them, it will have no impact and many will say why worry about it? But the VAT inspector wields considerable power and whilst some will think the new ruling does not apply to them, they may have to prove that they don’t owe anything.”

He added:

“Doctors should ensure they separate income on which VAT could be applied from that which isn’t liable in their accounts from 1 May. Accounts must be in good order as VAT inspectors may want to carry out detailed inspections. Contacting a professional accountant to advise doctors on the new ruling is probably the best course of action.”

The new ruling means that if the main purpose of the medical service is the protection, maintenance or restoration of a patient’s health then the services will continue to be exempt from VAT. However, if the purpose of a medical examination or report is for a third party, such as a medico-legal report, the medical services will be subject to VAT at 17.5%.

The BMA has welcomed the recent clarification from the HM Revenue & Customs that cremation certificates (forms B, C, F and FF) issued by doctors will remain exempt from VAT. Further details of this exemption will be placed on the doctors’ fees section of the BMA website shortly.

Ends

Notes to editors
1.  The new rules on VAT, that will take effect on 1 st May 2007, are the result of a European Court of Justice (ECJ) decision in 2003. In the case of Dr Peter D’Ambrumenil and Dispute Resolution Services, the ECJ ruled that the UK exemption for medical services was too wide. Before this ruling, HM Revenue & Customs’ view was that any services supplied by a medical professional were exempt from VAT, with the exception of services which were predominately legal in nature.

2.  Guidance is available on the BMA website at : http://www.bma.org.uk/ap.nsf/Content/VATonmedicalservices

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