VAT Relief (Exemption) and Medical Research
(Summaries from HMRC VAT Notice 701/6 – Charity funded equipment for medical, veterinary etc uses for departments involved in public/charity funded medical research)
To decide whether VAT relief may be claimed you will first need to know:
- Whether the University is purchasing the goods/services for its own use i.e. are not being purchased for re-sale, and if so
- What will the University actually be using them for?
- Is the medical research funded by eligible funds (i.e. grant, departmental, or charity funds)?
- Are these items eligible for VAT relief?
NB: In FMS, if your sub project is fully funded by a commercial body (Tax System FR for VAT-fully-recoverable), PLEASE DO NOT CLAIM VAT RELIEF.
There are three ‘medical’ zero rate reliefs:
- The purchase of medical, scientific, computer, video, sterilising, laboratory and refrigeration equipment predominantly for use in medical or veterinary research, training, diagnosis, or treatment
- The purchase of medicinal products and substances wholly for use in medical/veterinary research, treatment or care
- The purchase of custom made computer programmes/licences to use software solely for the purposes of medical research, diagnosis or treatment
The University is able to benefit from VAT zero rating relief when it purchases (or hires) “relevant goods” which are predominantly for use in medical/veterinary research, training, diagnosis or treatment. Relevant goods constitute items of medical, scientific, computer, video, sterilising, laboratory, or refrigeration equipment. HMRC defines ‘equipment’ as articles designed for a specific purpose. They are usually durable, although certain disposable items such as syringes that are designed to be used once only, may still be equipment. The VAT relief applies irrespective of whether equipment is bought outright, leased or rented.
a) Medical Equipment
This is equipment that has features or characteristics that identify it as having been designed for a medical (including dental), purpose or function, such as the diagnosis or treatment of patients.
This covers a wide range of goods, from simple items like bandages and tongue depressors to complex machinery such as X-ray machines and scanners.
General use items used to equip a medical facility such as a television purchased for use in a hospital ward are not medical equipment
b) Scientific Equipment
This is equipment designed to perform a scientific function. This includes precision measuring equipment and analytical equipment such as thermometers, weighing machines and spectrometers.
Equipment that is not designed to perform a scientific function, but merely works on a scientific principle, is not scientific equipment
c) Computer Equipment
This includes computer hardware such as servers, screens, keyboards, and disks. It also includes ‘normalised’ i.e. off the shelf computer programmes. Custom made programmes and licences to use programmes are services and not equipment, see page 10. Machinery or other equipment that is either operated by computer or has computerised components is not computer equipment
d) Video Equipment
Covers video recording and playback equipment
e) Sterilising Equipment
This includes autoclaves and other specialised equipment using steam or other high temperature processes. Microwave ovens and other cooking appliances do not qualify even when used to sterilise. Sterilising fluid is not equipment and does not qualify
f) Laboratory Equipment
This is equipment designed for use in a laboratory such as test tubes and other laboratory glassware, Bunsen burners, fume cupboards, microtomes, cryostats, laboratory benches and specialised sinks and catchpots
N.B. Ordinary cupboards, lockers, seats and other furniture are excluded together with other general purpose items
g) Refrigeration Equipment
This includes all cooling and freezing equipment whether or not of an industrial type, special design for specific purpose or the common domestic ‘fridge’ etc.
h) Resuscitation Training Models
Resuscitation training models (resuscitation dummies) can be zero- rated if they include a head and torso designed only for use during first aid training in cardiopulmonary resuscitation and/or defibrillation techniques
Parts and Accessories
VAT relief is available for parts and accessories to relevant goods. Parts are integral components without which the equipment is incomplete. Accessories mean optional extras that are not necessary for the equipment to operate in its normal course, but are used to:
- improve the operation of the equipment; or
- enable the equipment to be used, or used to better affect, in particular circumstances
This would cover e.g. a printer for use with a computer, a specifically designed camera for use with a microscope, a rack for holding test tubes
Items that are not parts or accessories are:
- items that have independent uses such as television sets
- accessories to accessories such as a filter for a camera which is itself an accessory to a microscope
- consumables such as ink cartridges, specialised paper and generic bulk substances such as liquids, powders, sheets, pellets, and granules
Repair and maintenance of eligible goods
VAT relief may be obtained for the repair or maintenance of eligible goods which are owned or possessed by the University. This includes work done under a maintenance contract or as a ‘one-off’ repair; goods supplied in connection with such services are also included in the relief
If the normal selling price of goods which are eligible for relief contains an amount for installation, fixing or connection to mains services and/or testing equipment on site, zero rating will apply to the whole selling price i.e. including that element which relates to installation or testing. However, where building works, such as the removal of walls or the reinforcing of floors are necessary in order to install large items of equipment, these works will be standard-rated, even when carried out by the supplier of the eligible equipment
Examples of goods which may be eligible for VAT relief
Aprons, lead lined for x-ray protection
Bedpan washers, with sterilising steam cycle
Beds, highly specialised e.g. net suspension or medical water beds
Clamps - medical
Computer disks and tapes
Computer printers (not eligible when used in general administration)
Computer screen filters
Eye test charts
Examination couches, adjustable
First aid kits - supplied as pre-packaged units
Ice making machines
Identification bracelets for patients
Mattresses, specially designed for the relief/prevention of pressure sores
Medicine measures, graduated
Patient trolleys and stretchers
Physiotherapy equipment, specialised - other than gymnasium equipment
Pillows, orthopedic, specially designed and used for neck or spinal injuries
Renal dialysis units
X-ray machines - medical
X-ray machines - other
Examples of goods which are not eligible for VAT relief
Air conditioners (non-specialised)
Alarms, security or smoke
Bedpan washers, other
Closed circuit television systems
Nurse call systems
Occupational therapy materials
Overhead projecting units
Waste disposal bags, boxes, jars and sacks
Waste disposal machinery
The purchase of medicinal products and substances used wholly in medical/veterinary research, treatment or care
The University is able to purchase medicinal products and substances which it will use wholly for medical/veterinary research, treatment or care
a) Medicinal Products
A ‘medicinal product’ is a substance presented as a medicine, or an ingredient for a medicine, capable of being administered to people or animals for a medicinal purpose. The zero rate covers medicinal products purchased for the purpose of testing the effectiveness of those products
N.B. A ‘medicinal purpose’ means:
- treating or preventing disease
- diagnosing disease or ascertaining the existence or degree of a physiological condition
- inducing anesthesia
- otherwise preventing or interfering with the normal operation of a physiological function, whether permanently or temporarily, and whether by terminating, reducing or postponing, or increasing or accelerating the operation of that function, or in any other way
b) Drugs and Chemicals
The University can claim VAT relief when purchasing substances directly used for testing, or for mixing with other substances, in the course of medical or veterinary research.
N.B. A ‘substance’ can be natural or artificial and can be in solid or liquid form or in the form of a gas or vapour. If the substance is purchased in the form of gas, the zero-rating will also apply to the cylinder rental.
The purchase of custom made computer programmes/licences to use software solely for the purposes of medical research, diagnosis or treatment.
The University is able to claim VAT zero rating on the purchase of custom made computer programmes and licences to use software which are solely for the purposes of medical research, diagnosis or treatment.