Specified goods and services supplied both to individuals and to charities are zero rated. Conditions for applying the relief are complex and a number of qualifications must be met. However, the relief can result in the zero rating of a wide range of goods including drugs, medical or surgical appliances, cars, lifts, chair lifts, hoists and alarm systems.

Also potentially zero rated are the repair and maintenance of qualifying items, adapting goods to suit the needs of the disabled, providing ramps for access and widening doorways and providing or adapting bathrooms.

For further information see the following HMRC manuals and guidance

• VAT Notice 701/6: charity funded equipment for medical, veterinary etc uses
• VATHLT6020 – The zero rate for dispensed drugs: background: scope and coverage
• VRDP27500 – Medical and surgical supplies: introduction of Legal Notes 5A to 5I (anti-avoidance measure)

Medicinal products

Zero rating is available for the supply of certain medicinal products to be used by a charity for providing care, treatment or engaging in research. This zero-rates the supply of a medicinal product to a charity providing care or medical or surgical treatment for human beings or animals or engaging in medical or veterinary research where the supply is solely for use by the charity in such care, treatment or research.

Medicinal products which qualify for relief are those capable of being consumed or otherwise absorbed into the body. For example, a pill to be taken orally would fall within this description, whereas a syringe would fall outside it.

HMRC states that ‘medicinal purpose’ means:

• treating or preventing disease
• diagnosing disease or ascertaining the existence or degree of a physiological condition
• inducing anaesthesia or
• preventing or interfering with the normal operation of a physiological function, whether
• permanently or temporarily, and whether by terminating, reducing, postponing, increasing or
• accelerating the operation of that function or in any other way.

HMRC also states that medical and veterinary research should be given its technical meaning: it is restricted to activities which are directed towards opening up new areas of knowledge or understanding or the initial development of new techniques, rather than towards mere quantitative additions to human knowledge.

‘Medical or veterinary treatment’ includes the administration of medicines, physiotherapy and surgery.

In order to qualify for the zero rating relief a charity must provide the supplier with the necessary declaration confirming that the medicinal product will be used for a qualifying purpose.

Imports by charities of medicinal products can be zero-rated provided the charity gives the supplier a certified declaration that the goods are to be used for the specified purpose. The appropriate declaration must be presented with the Customs entry form.

This relief is restricted to charities that will be using the products themselves; a charity which donates these items to another charity cannot obtain relief. In addition, this relief is only available to registered charities; other not-for-profit bodies such as the NHS cannot generally obtain this relief.