VATHLT2015 - Covid Testing

This article replaces Revenue and Customs Brief 11 (2021): VAT liability of coronavirus (COVID-19) testing services issued on 23 August 2021.

This article summarises the rules for the VAT treatment of coronavirus (COVID-19) testing services

There is a distinction in the VAT treatment between automatic liquid flow tests and more sophisticated tests such as PCR (polymerase chain reaction) tests which need to be carried out in a laboratory.

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).  It should be noted that liquid flow tests can be completely self-administered.

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 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 generally seen as an external recognition of adherence to a set of standards, whereas regulation involves active supervision.  However, where accreditation of a laboratory involves supervision of the testing by medical professionals, Note 2 to Group 7 may well be satisfied regardless of whether the sample was taken by a medical professional or by the individual concerned as the taking of the sample is not seen as the test itself.

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 PCR tests where included within the supply are testing and diagnosis of a sample— 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 and 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