Medical Practitioners' services will be subject to VAT from 1 May 2007.
Doctors should be aware of new VAT rules that took effect from 1 May 2007 as a result of a European Court of Justice (ECJ) decision in 2003. The ECJ has ruled that the UK exemption for medical services was too wide.
Before this ruling, HM Revenue and Custom's 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.
The care and treatment of patients by the NHS continues to be exempt from VAT, as does any medical service carried out primarily to protect, maintain or restore the health of an individual.
However, if the purpose of a medical exemption or report is to enable a third party to decide a course of action, the medical services will not be VAT exempt, but be subject to VAT at 17.5 per cent.
The British Medical Association has advised doctors to be aware of the new VAT rules. Individual doctors and practices will need to consider very carefully how the new rules will affect them and whether they need to register for VAT.
Doctors should ensure that their patients are appropriately informed about changes to chargeable services as a result of the new regulations.
If you would like more information on VAT issues affecting the medical profession please contact us.