HM Revenue & Customs has informed businesses that COVID-19 testing services are considered supplies of medical care for VAT purposes when they are administered or supervised by a medical professional.
In an August 23 brief, HMRC said that businesses had requested that the government clarify how the U.K. VAT rules apply to COVID-19 testing services. The brief says that COVID-19 testing services are exempt from VAT if they are carried out and supplied by a health professional defined under paragraph 2 of VAT Notice 701/57, supplied by a nonregistered person but performed by a health professional, carried out by a nonregistered person under the supervision of a health professional, or supplied by a hospital or state-regulated institution. It added that these exemptions are in line with the standard VAT rules for supplies of medical care.
HMRC said that an institution accredited by the United Kingdom Accreditation Service is not considered “a state regulated institution” for exemption purposes. It also said that the supply of COVID-19 testing by a business that is regulated by the Care Quality Commission for other services, but not COVID-19 testing, is standard rated for VAT purposes (at 20 percent).
Regarding VAT groups, the brief states that “the condition that the body is state-regulated applies only to the company actually making the supplies and not to the representative member of the VAT group.” HMRC also noted that COVID-19 testing services provided for international flights may be considered VAT-exempt if they meet the exemption requirements for supplies of medical care.
In its brief, HMRC provided examples of the VAT treatment of various COVID-19 testing supplies, saying that sales of at-home testing kits are standard rated. COVID-19 tests supplied by a manufacturer to various medical providers are standard rated as well. Tests that are administered directly by pharmacists or that are administered or directly supervised by a healthcare professional in general practice surgeries are VAT exempt. However, “each case will to some degree depend on the specific facts of the contracts involved,” HMRC said.