Drugs administered to outpatients and personal use

The taxpayer was a wholly owned subsidiary of the Clatterbridge Cancer Centre NHS Foundation Trust. It operated a pharmacy for dispensing qualifying goods to outpatients of the trust.

It charged a dispensing fee to the trust which HMRC said should be standard rated because the medicines were administered to the patients usually by an injection rather than administered by the patients themselves. The department argued that the supplies therefore failed the ‘personal use’ of an individual requirement of the zero-rating legislation at VATA 1994 Sch 8 Group 12 item 1 note 5(A).

The taxpayer argued that the drugs were prescribed to a specific patient and therefore met the ‘personal use’ requirement so it was irrelevant how they were administered. The purpose of note 5(A) it argued was to preclude only the zero rating of supplies made in hospitals or nursing homes.

HMRC emphasised the...