2025-06-11 11:53:42
Mentioning VAT risks sending many members to sleep, but a recent decision of the First Tier Tribunal throws up some points of interest.
In Clatterbridge Pharmacy Limited v Commissioners for Revenue and Customs [2025] UKFTT 00661 (TC), Clatterbridge Pharmacy Limited (CPL) was a wholly owned subsidiary of the Clatterbridge Cancer Centre NHS Foundation Trust (the Trust). The Trust specialises in the treatment of cancer. CPL, which was run on an arms-length basis, dispensed prescriptions written by doctors at the Trust. The Trust paid CPL a dispensing fee.
The prescriptions in question were for medicines to be administered parenterally by a healthcare professional in patients’ own homes. The supply of medicines would be zero-rated if they were dispensed to an individual for that individual’s personal use on the prescription of an appropriate practitioner.*
The Tribunal had to decide whether the medicines were for the patient’s personal use. HMRC argued that patients could inject themselves with some medications and that supplies were not zero-rated if they were dispensed in order for them to be administered to the patient by a healthcare professional in the course of their medical care.
The Tribunal regarded the arrangements between the Trust and CPL as “a situation which was clearly not envisaged at the time that the statute was written.” The Tribunal rejected the HMRC argument, saying:
“If a pharmacist said to an individual ‘this is for your personal use only’ we consider that this would be understood to mean ‘this must only be used on/in your body’ not ‘you must be able to administer this yourself’.
The Tribunal ruled in favour of CPL, holding that a supply on a prescription for a named patient was a supply for that patient’s personal use. The Tribunal added that its interpretation of the words “personal use” avoided
“the potential absurdity in HMRC’s reading of the legislation, which would mean that, at its most extreme, the zero rating of supplies of a drug by a pharmacy would depend on whether a particular patient had been ‘signed off’ by a nurse as able to receive and administer the drugs themselves, and this situation could move from standard rating to zero rating and back again over a period of months depending on such things as the situation of the patient and the exact timings of the ‘signing off’ procedure by nurses.”
*For those who are interested, the relevant provision is Schedule 8 to the Value Added Tax Act 1994.