This HMRC brief (reproduced below in full) explains the rules for the VAT treatment of coronavirus (COVID-19) testing services.

You should read this brief if you’re:

• an organisations that make supplies of COVID-19 testing services and their advisers
• recipients of these services

Existing policy

COVID-19 testing is widespread because of the current pandemic. HMRC has received requests from businesses and business representatives to confirm how to apply the rules, for example:

• whether supplies of COVID-19 testing services are supplies of medical care provided by state-regulated institutions
• the circumstances in which such services are exempt from VAT

The service of COVID-19 testing is treated as medical care where it involves administration of the test to the patient and the provision of the results by a medical professional (including where such activity is supervised by a medical professional).

In line with the normal VAT rules that apply to such care, it can only be exempted where it is:

• carried out and supplied by a relevant health professional within the meaning of items 1, 2, 2A or 3 of Group 7 of Schedule 9 of the VAT Act 1994. Health professionals are listed in paragraph 2.1 of VAT Notice 701/57
• supplied by a non-registered person, but the services are wholly performed by a relevant health professional — the exemption does not apply where the health professional is a dental technician
• carried out by a non-registered person acting under the supervision of a relevant health professional — the exemption does not apply where the health professional is a pharmacist, pharmacy technician or dental technician
• supplied by a hospital or state regulated institution — in this case the exemption also covers the supply of any goods in connection with the supply — Check VAT Notice 701/31 for more information.

Accreditation by UKAS (UK Accreditation Service)

Accreditation by UKAS is not state-regulation for these purposes. Accreditation is not the same as state-regulation. Accreditation is generally seen as an external recognition of adherence to a set of standards, whereas regulation involves active supervision.

Where providers are regulated by the Care Quality Commission (CQC) for providing other services

The supply of COVID-19 testing by a body regulated by the CQC (or equivalent in Northern Ireland, Scotland & Wales) for other activities, but not COVID-19 testing, remains standard rated. The exemption can apply if the supply meets another of the tests required to qualify.

Where a provider is in a VAT group

The ‘special status’ that is required in order to get exemption (in this case being a state-regulated body) is unaffected under the VAT grouping rules. This means that the condition that the body is state-regulated applies only to the company actually making the supplies and not to the representative member of the VAT group.

Treatment of COVID-19 Travel Tests

HMRC considers that the objective purposes of COVID-19 testing are diagnosis and the protection of human health, for example, to protect the individuals being tested and others from infection. This also applies to tests taken for international air flights. Accordingly, such testing may be exempt medical care subject to meeting the usual requirements.

Although each case will to some degree depend on the specific facts of the contracts involved, some examples of the VAT treatment of Covid-19 test kits and testing are:

• sales of tests where the test is self-administered and an immediate result provided — these are standard rated
• sales of tests where included within the supply are testing and diagnosis of a sample provided by someone other than the buyer — where the testing and diagnosis is carried out or directly supervised by a registered health professional then the sale is exempt, where this is not the case the sale will be standard rated
• tests administered in pharmacies — these are only exempt where directly administered by the pharmacist
• tests in GP surgeries — these are exempt from VAT where administered or directly supervised by a registered healthcare professional
• tests supplied by the manufacturer to hospitals, pharmacies or GP surgeries — these are standard rated for VAT

Further information

For more information on VAT and healthcare, read HMRC manual VAT Health.