1. Welcome to Understanding how VAT can improve Your Practice
By Jim Mandeville

2. Heading here... Sub-heading here... Body text here...
As you can see we are largest GP dispensing Doctor membership organisation in the UK something we are very proud of.
Having this level of buying power ensures we can bring you and your practices the best deals and in turn maximise your profitability.
On average our members realise a new profit of between 37-42%

3. Our generic offering Active Price Management know as APM gives you numerous benefits as outlined but most importantly gives you back time, money and increased profit for you and your practice

4. Welcome
As you can see there are many benefits to your membership with PSUK – From enhanced & competitive discounts, to bespoke advice on prescribing and purchasing, through to clinical support from pharmacists and Proscript connect our aim is to maximize the value we bring and in turn become a real value partner.

5. The event you are about to experience is one of over 40+ we deliver every year across the country and I know you will take a great deal of value from the workshop today.
So it gives me great pleasure to introduce our speaker for today please give a warm welcome to………

6. VAT – a tax on trading receipts

7. Areas to consider: Basic principles of VAT The concept of VAT as a tax
Accounting requirements – categories of income and expenses
Exemptions
cash v invoice accounting
Partial exemption
Including the de-minimis rule
Personally administered items
Making tax digital
Strategic planning

8. Basic principles Business income is liable to VAT
Referred to as ‘output tax’
VAT is paid to suppliers on business costs
Referred to as ‘input tax’
VAT office are paid the excess of the output tax over the Input Tax (or repay where Input exceeds Output)

9. VAT income structure

10. Zero rated practice income
VATA 1994 Sch 8 Group 12 zero rates:
Drugs supplied to an individual for personal use on NHS prescription
This does not include drugs on private prescription
Personally administered items excluded (Exempt - (Dr Benyon and Partners))
Drugs supplied to an individual on any prescription when dispensed by a pharmacist
This does include drugs on private prescription

11. Exempt practice income
VATA 1994 Sch 9 Group 7 exempts:
Provision of services by medical professionals where ALL of the following are met:
Services consist of care, diagnosis treatment or assessment of a patient, and
The services are within the discipline you are registered to practice, and
The service requires the application of the knowledge, skill and judgement acquired in the course of your professional training
BUT the European Court of Justice REQUIRES purpose of work to be for the patients health

12. ECJ change of emphasis Health exemption applies to:
Services within the profession you are registered to practice where
The PRIMARY PURPOSE of the services is the protection, maintenance or restoration of the health of the person concerned
This is important bearing in mind the changes to NHS contracts and CCG incomes etc.

13. Accounting Requirements
Practice records need to identify income under the following categories:
Exempt services
E.g. healthcare, administered drugs, NHS reimbursements
Zero rated income
NHS dispensing
Standard rated income
Note this does not include supplier retrospective discounts
Items outside scope of VAT
Including Hospital salaries, donations, interest received, note copy fees

14. Accounting Requirements
Practice records need to identify expenditure under the following categories according to which income the cost relates to:
Expenses wholly attributable to exempt income
E.g. medical consumables, PA drug purchases
Zero rated income
NHS dispensing drug purchases and costs
Standard rated income
Non attributable expenses i.e. those relating to all parts of the practice
E.g. cleaning costs, stationery, repairs, light/heat
Items outside scope of VAT
Including salaries, donations, interest paid

15. Accounting Requirements
Choice of accounting method?
Cash accounting
OK if taxable sales lass than £1.35m
Income recorded by date received.
Expenses recorded by date paid.
Invoice accounting
The standard method – compulsory for higher taxable sales.
VAT due on sales by date invoiced.
Expenses VAT claimed by date incurred not date paid.
Cash flow advantage from invoice accounting.

16. VAT Accounting Chart

17. Partial exemption and de-minimis rule
Full recovery available where:
total exempt input tax <£7,500, and,
total taxable VAT allocated to taxable business more than 50% of total
Likely losers to de-minimis rule are:
administered drugs over £20,000 p.a.
Those with small dispensing lists v prescribing lists
Large practices generally

18. Monthly partial exemption

19. Personally Administered
Items supplied and administered by the practice which are –
Part of the overall NHS care
Supplied in single dose
Not taken away by the patient as normal dispensing
Still old ‘Red Book’ categories –
Injections
Skin closure/sutures
Anaesthetics
Contraceptive devices
Limited list of reagents

20. Personally Administered
So what do you identify as personally administered ?

21. Example – Zoladex LA
Income
Basic
235.00
Clawback
(26.27)
VAT allowance
41.75
Dispensing fee - estimated
1.90
Total income
£252.38
Cost
List price less 22% discount
183.30
VAT
36.66
Total cost
£219.96
Profit?
£32.42
(OR ? £69.08)

22. Making tax digital Phasing in from April 2019
VAT is first tax to be included
Needs on line submission of data
Most computer accounts will do this

23. Making tax digital Need to register using existing VAT log on details
Will apply from date of registration
Adjustments to VAT will be made through the accounts system

24. Strategic planning What is best approach for income
How to minimise expenses
If near to de-minimis – watch progress
Monthly VAT accounting
Strategy for PA items
Strategy for suppliers

25. PSUK Services
PSUK can guide and inform your practice by providing the following information and services as part of your PSUK membership;
Pharmaceutical Purchasing, Product Information, PSUK Schemes
Stationery/Medical Equip & Consumable Purchasing
Further Training – selection of topics and further assistance can be provided
Health & Safety Assistance
Surgery Insurance & Locum Cover
Stocktaking Service
Many more...
If you would like further information on the above and how your PSUK Membership can benefit your practice please contact PSUK directly on or via

26. Thank you Any Questions?
Please complete your feedback form and return to Ché