Tell accountant about VAT status of services
Contractors in England and Wales should alert their accountants as soon as possible to guidance on the VAT status of essential and advanced services, warns Mike Dent, head of finance at the Pharmaceutical Services Negotiating Committee.
Details of the VAT status of services delivered under the new community
pharmacy contract in England and Wales were published this week by HM
Revenue & Customs.
“It is unfortunate that HMRC has taken so long to come to a determination
of the VAT liability of new contract funding,” Mr Dent told The
Journal. “The information sheet published by HMRC makes it clear
that contractors will have to pay VAT on some aspects of their national
contract income. … As this is a complicated area it is important
that all contractors bring this issue to their accountants’ notice
as soon as possible,” he said.
HMRC has decided that advanced services are exempt from VAT and that
the item fee, establishment payment, protected professional allowance,
repeat dispensing annual payment, transitional payment and special fees
related to core dispensing activity are zero rated for VAT. However,
other aspects of the essential services attract different liabilities
or are outside the scope of VAT and contractors therefore need to apportion
the practice payment to reflect the different liabilities of the activities
it supports.
The PSNC is in discussion with HMRC about detailed implementation issues
and with the DoH on recovering the costs to contractors of both VAT suffered
and increased administration, Mr Dent said. “Communications on
these will be forthcoming as soon as there is anything to report,” he
added.
Details of the VAT treatment of essential services can be found on the
PSNC’s website (www.psnc.org.uk)
and in HMRC’s VAT
information sheet entitled “VAT — liability of essential
and advanced services supplied in England and Wales under the NHS contract
for community
pharmacy”. |
The
Pharmaceutical Journal
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