VQOTW: Animal medicines

My client is a vet and makes charges for animal medicines, sometimes as part of their treatment, like vaccinations and anaesthetics, and sometimes for aftercare or ongoing treatment of conditions at home.  He has always accounted for VAT at the standard rate on treatments and medicines, but a donkey sanctuary has opened up nearby which will give my client a significant amount of business, and they have suggested that medicines should be zero rated. Is there really a zero rating for this?

If the donkey sanctuary is a charity, then it may be correct that they are able to receive medicines zero rated.  VATA1994 Schedule 8, Group 15, Item 9 is the relevant legislation, which zero rates:

“The supply to a charity, providing care or medical or surgical treatment for human beings or animals, or engaging in medical or veterinary research, of a medicinal product where the supply is solely for use by the charity in such care, treatment or research.”

The relevant conditions here are that:

  • The charity provides care or medical or surgical treatment for animals, and
  • The supply is solely for use by the charity in such care or treatment.

VAT notice 701/1 explains in paragraph 6.1.8 the meaning of ‘medicinal product’ for the purpose of this provision.

Assuming that the donkey sanctuary is a charity, it would appear that the first condition is satisfied as its function would be to provide care for the animals.

In relation to the second point, if your client administers medicine as part of the treatment, this will be part of the standard rated supply of veterinary treatment.  However, where medicine is provided for the charity to administer to the animals in its care, this would be zero rated.

The charity would need to provide an eligibility declaration for your client to retain as his evidence to support zero rating, but none of the example certificates in Notice 701/6 apply to this particular item in the legislation.  Certificate A could be used as a template or basis for a letter confirming eligibility, but the charity would need to:

  • amend the customer category ‘a charitable institution providing care or medical or surgical treatment for handicapped persons’ to ‘a charitable institution providing care or medical or surgical treatment for animals’;
  • add ‘medicinal products’ as a category to the type of goods;
  • Declare the goods are to be used in care or treatment of animals, and
  • Apply for zero rating of the supply under Group 15, item 9 of the zero rate schedule.

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mm

Senior VAT Consultant
0844 892 2470


Viv has worked in VAT since 1989, when she joined HMRC as an Assurance Officer. Before joining the team as a consultant in 2000, she had spent five years dealing with written and telephone enquiries at a local VAT office.

In 2007/ 2008, she spent a year with a major accountancy firm gaining experience of VAT from a different perspective and developing skills which are relevant to her current role.

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