In Medacy Ltd v HMRC [2019] UKFTT 0576, TC 07370, the First Tier Tribunal (FFT) concluded that pharmacist-led clinical services provided to GP practices were supplies of services, not staff, and therefore qualified for VAT exemption.

  • Medacy Ltd had two main strands to its business.
    • It supplied locums and there was no dispute that it was supplying staff for VAT purposes and therefore liable to the standard rate.
    • Secondly, it had ventured into the provision of ‘Pharmacist-led clinical services’ which encompassed the provision of a pharmacist to a GP practice.
  • The pharmacists are employed by Medacy under permanent contracts and are paid a salary, whereas the GP practices are charged an hourly rate. Medacy paid for expensive insurance cover to protect it from claims for medical malpractice.

HMRC took the view that the ‘Pharmacist-led clinical services’ was, in fact, no different to the supply of locums and hence liable to the standard rate.

Medacy appealed on the basis that the supply is of medical care services (which is exempt).

The FTT concluded that Medacy was providing pharmaceutical services and its supplies were exempt. The fact that Medacy had medical insurance to cover the risk of being sued for medical malpractice was the decisive factor. The appeal was allowed.

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Medacy Ltd v HMRC