Amendment to zero rating rules for physiotherapists and podiatrists from 21 May

The Value Added Tax (Drugs and Medicines) Order 2014 will come into force on 21 May 2014, and will effect supplies made on or after that date. As a result of the order, ‘a physiotherapist independent prescriber’ and ‘a podiatrist independent prescriber’ will fall within the definition of ‘appropriate practitioner’. This means that supplies of drugs and medicines that are prescribed on prescription issued by specially qualified physiotherapists and podiatrists as ‘independent prescribers’ under the Human Medicines (Amendment) Regulations 2013 will, from 21 May 2014, be zero rated. Therefore, regardless of whether physiotherapists and podiatrists issue prescriptions as independent or as supplementary prescribers, the same VAT treatment will apply to the supplies of goods they make.

This change will not expand the volume of drugs and medicines which are allowed to be zero-rated, merely the range of health professionals allowed to prescribe drugs and medicines in their own right. Relevant health professionals will therefore need to consider how this policy change will impact their VAT positions.

A HMRC brief is due to be published announcing the change. It is also expected that a tax information and impact note will be published and available on the HMRC website in due course.

If you require any additional information or if you would like to discuss further, please contact your local Moore Stephens VAT specialist.

Further background
The Human Medicines (Amendment) Regulations 2013 (2013 No. 1855) came into force on 20 August 2013 and allowed appropriately trained physiotherapists and podiatrists to be able to prescribe drugs and medicines on prescription in their own right. The Value Added Tax (Drugs and Medicines) Order 2014 SI 2014/1111 adds physiotherapists and podiatrists to the list of appropriate practitioners in Note 2B to Item 1 of Group 12 of Schedule 8 to the Value Added Tax Act 1994 so that supplies that these practitioners make on prescription are zero rated when dispensed by a registered pharmacist and others similarly authorised.

Zero-rating has been applied to supplies of goods dispensed on prescription since the inception of VAT in 1973, although the legal restraints on who may dispense controlled drugs on prescription have changed several times since then. When the VAT Act was last updated in this respect by the Value Added Tax (Drugs and Medicines) Order 2009 (2009 No. 2972), it added a list of health professionals, who, in addition to doctors and dentists, were permitted to prescribe zero-rated goods.

The Value Added Tax (Drugs and Medicines) Order 2014 SI 2014/1111 now ensures that the latest changes to who may prescribe controlled drugs on prescription are reflected in the VAT Act. While physiotherapists and podiatrists were previously allowed to issue prescriptions as 'supplementary prescribers' under a written clinical management plan prepared by a doctor, the Human Medicines (Amendment) Regulations 2013 allow them to act as ‘independent prescribers’ once they have undertaken the necessary training. Therefore, the introduction of the announced change means that appropriately trained physiotherapists and podiatrists will also now be able to prescribe drugs on prescription that are dispensed zero-rated by a pharmacist or another similarly authorised without the supervision of a doctor.


UK VAT team

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