Updated VAT guidance welcomed by lab industry

GAMBICA has expressed satisfaction with the revised guidance from HMRC issued on 6 October 2023, shedding light on the eligibility for VAT relief on medical, scientific, laboratory, and related equipment or services meant for medical or veterinary research.

Ben Sunderland, of GAMBICA’s VAT group, said: “The new VAT Notice 701/6 clarifies many ambiguities introduced by previous versions, in particular by amendments made in the list of examples of qualifying goods. GAMBICA, after consulting with charities and universities, proposed changes to the issue of the VAT Notice published in October 2018 which had introduced even more ‘grey areas’ for suppliers.”

After fruitful discussions with HMRC, an agreement was reached to minimise ambiguity and enhance the impact of charitable funds. The guidance now allows zero rating where possible, benefiting research bodies unable to reclaim VAT. Eligible medical or veterinarian equipment used in research, diagnosis, and treatment funded by charitable donations or registered charities can be considered for zero-rated VAT, providing a 20% cost saving.

Louise Scattergood, also of the GAMBICA VAT Group, said: “The work done by GAMBICA members to facilitate these changes has been done with and on behalf of British universities, charities and hospitals across the UK purchasing medical and veterinary equipment. It will make research funds go considerably further simplifying decision making for both experts in research institutions and suppliers on applying zero rate VAT.”

The new VAT Notice addresses difficulties related to Personal Protective Equipment (PPE), allowing for zero-rated VAT if used in a medical or surgical capacity. The GAMBICA VAT Group's efforts resulted in the inclusion of additional items eligible for zero rate VAT, such as laboratory ovens, spectrometers, and specialised laboratory sinks. The guidance also clarifies the eligibility of laboratory consumables, specifying that reagents and substances may qualify for relief under VAT Notice 701/1.

GAMBICA has provided additional information, including a help document, consensus position on ‘Grey Items’, and a decision-making flow chart to assist suppliers and customers in determining eligibility for zero-rated VAT. GAMBICA encourages members to share information on decisions made by HMRC inspectors during VAT audits to ensure consistent application by different inspectors. The association emphasises that, with technological advancements, determining the eligibility of new equipment or materials may require specialist advice, and suppliers must make individual decisions on eligibility. For further details, contact Jacqueline.balian@gambica.org.uk

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