DDA chief executive Dr David Baker said Scottish dispensing practises need to be in contact with their accountants in preparation of VAT registration on the 1 July. ‘There is an awful lot of bureaucratic work to do,’ Dr Baker said.
Although VAT registration is unlikely to have a lasting affect on dispensing practice’s income, there are instances in the system where irregularities may result in a loss, Dr Baker said. ‘There are anomalies in the VAT system which do create difficulties,’ he said.
In England these anomalies arise from zero-rated or VAT exempt items, Dr Baker explained.
‘A personally administered drug (a drug given by the doctor to the patient during the consultation) is exempt from VAT. When an exempt drug is given to a patient, although the practice will have already paid VAT on it, they cannot claim VAT back because it is exempt,’ Dr Baker said.
VAT registered practices in England have faced difficulties over HM Revenue and Custom’s (HMRC) list of personally administered items, Dr Baker said.
‘The problem is that the list of personally administered items held by HMRC is not the same as the list held by NHS Prescription Services,’ he said. This means that for many drugs, practices pay the VAT on purchase but then cannot claim it back, he explained.
Ballantrae GP Dr Hal Maxwell said that, after VAT registration, Scottish dispensing practices would have to follow the same HMRC list.
Dr Maxwell said dispensing practices in Scotland may also find that, due to their small size, VAT registration creates a lot of work.
‘The vast majority of dispensing practices are small, isolated, rural practices with limited staff and recourses,’ he said. These practices will have to ‘meet the demands’ HMRC, which may prove difficult, he said.
Scottish practices that have already registered for VAT found that the process took a great deal of time and work, Dr Maxwell said. For those that haven’t yet registered, there is still a great deal more to learn. ‘Many practices will know very little,' Dr Maxwell said.