VAT on Home-Administered Medicines: Key Insights from Clatterbridge Pharmacy vs HMRC
Carolyn O’Shea · Posted on: July 22nd 2025 · read
Who should read this?
Healthcare professionals and businesses administering drugs to patients within their own homes.
This insight summarises the recent First Tier Tribunal case between Clatterbridge Pharmacy Limited and HM Revenue and Customs (TC09544).
Background
Clatterbridge Pharmacy Limited (CPL) is a subsidiary of the Clatterbridge Cancer Centre NHS Foundation Trust (Trust) which, via hospitals across Merseyside and Cheshire, provides cancer treatment to patients. CPL’s business is to dispense medication to the patients of the Trust.
HMRC disputes CPL’s VAT treatment of medicines administered intravenously to patients in their own homes. CPL treated these supplies as zero rated and has not charged VAT to the Trust.
The Case
The supply of medicines is zero rated if they are:
Qualifying goods
Dispensed to an individual
For that individual’s personal use on prescription
The prescription was dispensed by a registered pharmacist
There was no dispute that the goods were supplied on prescription, dispensed by a registered pharmacist or that the medicines were qualifying goods.
HMRC’s disagreement was regarding whether the goods were for ‘personal use’ and each parties’ respective interpretations of the phrase “personal use” used in Note 5A of Group 12, Schedule 8, of the VAT Act 1994.
“5(A) In item 1 the reference to personal use does not include any use which is, or involves, a use by or in relation to an individual while that individual, for the purposes of being provided (whether or not by the person making the supply) with medical or surgical treatment, or with any form of care—
- is an in-patient or resident in a relevant institution which is a hospital or nursing home;
- is attending at the premises of a relevant institution which is a hospital or nursing home.
HMRC argued that Note 5A must not be read as determining zero rating but merely aiding interpretation.
HMRC contended - how the drugs are administered to patients affects whether the goods are for personal use.
For example, if due to the nature of the drugs, the nurse carries ‘spill kits’ (in case the drugs are accidentally spilled) this would indicate that the medicines are not dispensed for ‘personal use’, but rather for an individual to ‘receive them from a healthcare professional.’
The tribunal disagreed with HMRC, stating Note 5A was drafted to explain what personal use was, rather than what it was not. Further, the legislation merely excludes supplies to people in certain situations from being zero rated for VAT.
"The tribunal concluded that the intention, when the legislation was drafted and when the wording was introduced, was to ensure supplies made within a hospital cannot be zero rated. The legislation was not intended to determine whether the medicines were or were not for personal use when the patient was outside the hospital."
Following the deliberation, the tribunal determined that the medicines administered at outpatients’ homes are zero rated. CPL were therefore correct not to charge VAT to the Trust, relating to the prescribed medicines provided to patients.
This is a welcome decision, as if the tribunal had agreed with HMRC, CPL would have been required to charge VAT to the NHS Trust. In general terms, the VAT charged by CPL would have represented a VAT cost to the NHS Trust.
How can we help?
The VAT legislation relating to healthcare services can be complex. If you are charging VAT on supplies of prescribed goods, please contact us to have a discussion on whether this is correct and whether zero rating is available.
