A recent First-Tier Tax Tribunal considered whether various ultrasound scans performed on pregnant women would qualify for exemption under Schedule 9 VATA 1994.
The discussions largely revolved around whether the principal reason for the scans was that persons were only concerned with the imagery made available, or if the overarching reason was to satisfy themselves of health of the foetus.
In this particular case, the appellant did not only provide imagery to the person, the sonographer considered whether there were any identifiable anomalies present and provided a report, and referred a patient as necessary to receive additional treatment.
This case helps to reinforce the emphasis on the ‘purpose’ test for healthcare exemption; where the NHS may receive additional income from persons for ultrasound scans, it should consider whether the overarching supply is of imagery, or is concerned with the health of the foetus.
Importantly – sales of separate items such as heartbeat teddy bears will not benefit from the exemption, these will likely form a mixed supply for VAT purposes and therefore have their own VAT liability attached (standard rated). It is the scans and any ancillary services to the scans that may be exempt from VAT.
If you are unsure on the implications for your organisation, please contact us here.