Medical research equipment and supplies
As the University is both a charity and an eligible body it can buy medical and scientific equipment at the zero rate, as long as it meets certain conditions.
Summary of the relief
As the University is both a charity and an eligible body it can buy, rent or hire medical and scientific equipment and supplies at the zero rate, as long as it meets certain conditions.
In order to qualify for zero rating purchases must meet three criteria:
- Purchases of medical equipment, software, products, or substances must be eligible for zero rating.
- The purchases must be used for a qualifying medical or veterinary use.
- The University must issue a zero-rating certificate (see below "How to get a zero-rating certificate") for each purchase that includes a declaration that that the purchase will be used for a qualifying purpose, and then send this to the supplier when the order is made.
Purchases that are eligible for zero rating
- Equipment
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Eligible equipment
Medical equipment is equipment that has features or characteristics that identify it as having been designed for a medical (including dental) purpose or function, such as the diagnosis or treatment of patients. This covers a wide range of goods, from simple items like bandages and tongue depressors, to complex machinery such as x-ray machines and scanners.
In addition, the following equipment can be zero rated when it is purchased or hired mainly for medical or veterinary research, training, diagnosis or treatment (definitions can be found at the bottom of the web page):
- Scientific equipment
- Computer equipment
- Computer software (must be solely used in medical research, diagnosis, or treatment)
- Video equipment
- Sterilising equipment
- Laboratory equipment
- Refrigeration equipment
Zero rating is also available for:
- Parts and accessories for equipment listed above
- Installation, repair and maintenance services for equipment that was zero rated when purchased.
Qualifying use
Medical equipment may only be zero-rated when it is purchased or hired mainly for the following (definitions can be found at the bottom of the web page):
- Medical or veterinary research.
- Medical or veterinary training.
- Medical or veterinary diagnosis or treatment.
Medical, scientific, computer, video, sterilising, laboratory, or refrigeration equipment purchased for any other use is not eligible for zero rating. This includes equipment purchased or hired for:
- general biological studies
- environmental research
- research into animal husbandry or food production
- general administration
- domestic or leisure purposes
- Medical products
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Eligible Products
A ‘medicinal product’ is a substance presented as a medicine, or an ingredient for a medicine, capable of being administered to people or animals for a medicinal purpose. The zero rate also covers medicinal products purchased by a charity for the purpose of testing the efficiency of those products.
Qualifying Use
‘Medicinal purpose’ means:
- treating or preventing disease
- diagnosing disease, or ascertaining the existence or degree of a physiological condition
- contraception
- inducing anaesthesia
or otherwise preventing or interfering with the normal operation of a physiological function, whether permanently or temporarily, by terminating, reducing or postponing, or increasing or accelerating the operation of that function, or in any other way.
- Substances
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Eligible Substances
A ‘substance’ can be natural or artificial and can be in solid or liquid form or in the form of a gas or vapour. If the substance is purchased in the form of gas the zero-rating will also apply to the cylinder rental
Qualifying Use
A charity engaged in medical or veterinary research can purchase substances directly used for testing, or for mixing with other substances during that research, at the zero rate.
- Excluded items
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Certain items are explicitly excluded from the exemption, so it is important to take care when placing an order. General use consumables are excluded such as:
- Stationary
- Cleaning and sterilising fluids
- Oil
- Clothing (other than specialist medical clothing such as surgical masks, gowns and gloves). Note that Nitrile gloves are excluded.
- Waste disposal bags
- Bulk materials, such as liquids, powders, sheets, pellets and granules
General use equipment used to equip a medical facility, such as a television purchased for use in a hospital ward is also excluded.
Summary of qualifying use
| Qualifying use - summary | Research | Training | Diagnosis or treatment |
|---|---|---|---|
| Equipment | Yes | Yes | Yes |
| Medical products | Yes | No | Yes |
| Substances | Yes | No | Yes |
How to get a zero-rating certificate
The University finance system automatically generates zero rating certificates when a requisition is raised, and the tax code “PM” is selected. The certificate is automatically incorporated into a purchase order and sent by workflow for the appropriate level of authorisation. For items valued over £20,000 an additional, more detailed form is required (see authorisation limits section below).
Some suppliers may also request an additional certificate. Any additional certificate requires the same authorisation as the automatically generated zero-rating certificate. Templates for these can be found here:
- Zero rated certificate: Medical & Scientific Equipment
- Zero rated certificate: Medicinal Products
- Zero rated certificate: Computer Software
- Zero rated certificate: Substance for Use in Synthesis & Testing
Authorisation limits and approval
In addition to the usual authorisation the zero rate certificate also requires authorisation. This depends on the value of the equipment purchased.
- £0 to £1,000: Certificate requires authorisation from the Requisitioner. The requisition is raised selecting tax code ‘PM’ and the finance system will automatically produce and send a certificate to the supplier with the Purchase Order.
- £1,001 to £19,999: Certificate requires authorisation by your School Finance Manager. The requisition is raised selecting tax code ‘PM’ which will generate a workflow task requesting approval from the School Finance Manager. The finance system will automatically produce and send a certificate to the supplier with the Purchase Order. For purchases over £10,000 the Zero Rated VAT Form - Items Over £10,000 [DOCX 16.55KB] should be completed and attached to the requisition in the finance system.
- £20,000 and above: Certificate requires authorisation by your School Finance Manager and Assistant Director of Finance or Tax Manager. The requisition is raised selecting tax code ‘PM’. The Zero Rated VAT Form - Items Over £10,000 [DOCX 16.55KB] should be completed and attached to the requisition in the finance system. This will generate a workflow task requesting approval from your School Finance Manager and the Assistant Director of Finance or Tax Manager. The finance system will automatically send the certificate to the supplier with the Purchase Order.
Definitions
- Scientific equipment
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Scientific equipment is equipment used for observation, experimentation and measurement. It is designed to perform a scientific function. This includes precision measuring equipment and analytical equipment such as microscopes, thermometers, weighing machines and spectrometers.
Equipment that is not designed to perform a scientific function, but merely works on a scientific principle, is not scientific equipment.
- Computer equipment
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Computer equipment includes computer hardware such as servers, screens, keyboards, and disks. However, where a complete network is being supplied only those items which are to be used for a qualifying use are eligible for relief; not the whole network. Note that here, computer software is not goods or equipment though relief could be available (see software on flowchart).
- Video equipment
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This includes video recording and playback equipment. It includes video recorders, tapes and video cameras. Ordinary and digital cameras are not included in this category. (Digital cameras do not qualify as a part or accessory to computer equipment either). Note: As technology advances video cameras will become obsolete. It is extremely unlikely that the relief will be amended to reflect this.
- Sterilising equipment
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Equipment for sterilising medical and laboratory instruments including autoclaves and other specialised equipment using steam or other high temperature processes.
Microwave ovens and other cooking appliances are not sterilising equipment, even if they can be used to sterilise. Sterilising fluid is not equipment, and does not qualify for zero rating, even when purchased by an eligible body.
- Laboratory equipment
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This includes equipment that is designed for use in a laboratory, such as test tubes and other laboratory glassware, Bunsen burners, fume cupboards, microtomes, cryostats, laboratory benches, specialised sinks and catchpots, but does not extend to the complete furnishing of a laboratory.
The following are not laboratory equipment:
- ordinary cupboards, lockers, seats and other furniture, even when these are used to equip a laboratory
- bulk materials such as liquids, powders, sheets, pellets, granules
- general purpose items used to equip a laboratory
- consumables such as chemical reagents, medicines, and cleaning and sterilising fluids
- Refrigeration equipment
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This includes all cooling and freezing equipment, whether designed for industrial, domestic or any other purpose. Includes items such as ice making machines.
- Parts
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Parts are integral components without which the equipment is incomplete.
NOTE: Items that are not parts include:
- Items that have independent uses, such as television sets
- accessories to accessories (e.g. printer cartridges/toner/ink are accessories to accessories and do not qualify)
- generic bulk substances, such as liquids, powders, sheets, pellets and granules
- Accessories
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Accessories are optional extras that are not necessary for the equipment to operate in its normal course, but are used to:
- improve the operation of the equipment
- enable the equipment to be used, or used to better effect, in particular circumstances
This would cover, for example, a printer for use with a computer; a specially designed camera for use with a microscope; and a rack for holding test tubes.
NOTE: Items that are not accessories include:
- Items that have independent uses, such as television sets
- accessories to accessories (e.g. printer cartridges/toner/ink are accessories to accessories and do not qualify)
- generic bulk substances, such as liquids, powders, sheets, pellets and granules
- Installation
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If the normal selling price of relevant goods includes an amount for installation (i.e. installed goods), fixing or connection to mains services and/or testing equipment on site, zero rating applies to the whole selling price - including that element which relates to installation or testing.
Where building works, such as removal of walls or reinforcing floors, are necessary in order to install large items of equipment, these works are standard rated, even when carried out by the supplier of the equipment
- Medical or veterinary research
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This means original research into human or animal disease and injury.
- Medical or veterinary training
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This covers the training of doctors, nurses, surgeons (including dental and veterinary surgeons), and other professionals involved in medical or veterinary diagnosis or treatment. The overall programme of training should include the physical application by the students of theoretical knowledge. The teaching of subjects like biology and zoology, where the trainee has no practical medical or veterinary involvement with patients, is not medical or veterinary training for the purposes of this VAT relief.
- Medical or veterinary diagnosis or treatment
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This is the diagnosis and treatment of a physical or mental illness or injury by a medical or paramedical practitioner or a veterinary surgeon.