The Value Added Tax (Drugs, Medicines and Aids for the Handicapped) Order 1997

Explanatory Note

(This note is not part of the Order)

This Order, which comes into force on 1st January 1998, amends Group 12 of Schedule 8 to the Value Added Tax Act 1994.

Article 3 amends Item 1 of the Group and requires that, for zero-rating to apply, the goods must be qualifying goods and that they must be dispensed by a pharmacist to an individual for his personal use. Article 4 amends Item 1A so that only qualifying goods may be supplied by Doctors who are required or authorised to provide pharmaceutical services on behalf of the National Health Service at the zero-rate. Article 4 also updates the reference to legislation operating in Northern Ireland. Article 5 inserts a new Note (2A), which defines qualifying goods for the purposes of items 1 and 1A.

Article 7 inserts new Notes (5A) to (5I) which restrict Items 1, 1A and 2 of the Group.

Note (5A) provides that the supply of qualifying goods is not eligible for zero-rating if those goods are used while a person is receiving medical or surgical treatment or care in, or whilst attending a hospital or nursing home.

Note (5B) provides that the supply of medical and surgical appliances is not eligible for zero-rating if those goods are used while a handicapped person is receiving care or medical or surgical treatment in, or whilst attending a hospital, nursing home or other institution. These hospitals, nursing homes and other institutions (“relevant institutions”) are defined in Note (5I).

Note (5C) provides that Note (5B) does not apply for the purposes of determining whether supplies to charities and supplies of invalid wheelchairs and carriages and parts and accessories thereto by persons mentioned in Note (5H) are within item 2.

Note (5D) provides that goods of a description falling within item 2 (but not medical or surgical appliances, parts and accessories thereto, incontinence products and wound dressings) can be supplied at the zero-rate to handicapped persons receiving medical or surgical treatment or any form of care in a relevant institution by persons other than those mentioned in Note (5H). Note (5E) however provides that if such other suppliers make the supply in accordance with an agreement, arrangement or understanding to which a person mentioned in Note (5H) is or has been a party or has paid for the goods then the supply will be excluded from the zero-rate. Note (5F) provides that the supply of an invalid wheelchair or invalid carriage will only be excluded from the zero-rate by Note (5E) if a person mentioned in paragraph (g) of Note (5H) is or has been a party to the supply or paid for it in whole or in part or a person mentioned in paragraphs (a) to (f) of Note (5H) has paid the whole of the consideration for the supply. Note (5G) defines invalid wheelchair and invalid carriage for the purposes of the Group and Article 6 makes the necessary consequential change to Note (4).