key: cord-0053514-8mi8ory0
authors: Slinger, Paula
title: VAT returns
date: 2020-12-07
journal: BDJ In Pract
DOI: 10.1038/s41404-020-0582-6
sha: 28a9c3c5e3e15e730044cfe52d95a5a2f17aa265
doc_id: 53514
cord_uid: 8mi8ory0

nan

https://doi.org/10.1038/s41404-020-0582-6 VAT returns V AT (Value Added Tax) is a tax that is payable on goods and services when your business income reaches the VAT threshold of £85k.

VAT can cause some confusion for dentists, but due to the nature of dentistry, most dentists who simply provide general dental services will find that they are actually exempt from VAT.

The confusion stems from the fact that there are different rates of VAT, depending on the type of goods or services your business provides. Firstly, there are three different VAT rates that are payable, they are: AE Standard rate -20% AE Reduced rate -five per cent AE Zero rate -Zero per cent.

There are also some goods and services that are exempt, so no VAT is charged on them.

Dentists, orthodontists and dental care professionals registered with the GDC are eligible to be VAT exempt, providing the services delivered are focused on the protection, maintenance or restoration of the health of the person concerned.

An example of services that would fall into the exempt category are those services you would find associated with an NHS GDS contract or PDS agreement, so the routine dental care which is not for cosmetic purposes for instance.

Other examples include the delivery lectures that improve health such as oral health promotion, writing reports directly relevant to protecting, maintaining and restoring an individual patient's health. Also included are drugs or appliances provided in the course of dental care and treatment along with dental prostheses such as crowns, orthodontic appliances, bridges, dentures, artificial teeth and palates.

Services that are not exempt from VAT would include services that are not aimed at the prevention, diagnosis, treatment or cure of oral health disease or disorders. Further examples of services or products not exempt from VAT include cosmetic dental services that are not delivered to protect, maintain or restore health, the sale of dental products/sundries such as toothpaste and toothbrushes, some insurance reports, writing for journals and consultancy. Any medicines such as those privately supplied for self-administration by a patient, for example, for overseas travel purposes, are not exempt from VAT.

Smoking cessation products are charged at zero rate. Therefore you would still register for VAT if you reach the VAT threshold but you would charge VAT at 0% on goods sold. You should still show the VAT information on your invoices even though it is at zero rate. You could however reclaim back any VAT paid on goods associated with this product.

Some dentists who are VAT exempt will ask us if they can still claim back any VAT they have paid on equipment and goods. Unfortunately, you cannot claim VAT if you do not pay VAT.

What if you provide products or services that are both VAT exempt and VATable?

You would be eligible to pay VAT on VATable services and products at the standard rate. You will therefore be able to claim back any VAT you have paid to suppliers that directly relate to the VATable income you receive. For example, if your income is 50% prevention, diagnosis and treatment services and 50% cosmetic services, then you could claim back 50% of the VAT you have paid on utilities and claim back any VAT paid for materials used in delivery the cosmetic services. You would not claim VAT on the materials used in treatment that protects, maintains or restores health as this is VAT exempt.

During COVID-19 times some PPE will fall into the zero-rated category of VAT. Government guidance 1 lists the following PPE as being included: AE Disposable gloves AE Disposable plastic aprons AE Disposable fluid-resistant coveralls or gowns AE Surgical masks -including fluid-resistant type IIR surgical masks AE Filtering face piece respirators AE Eye and face protection -including single or reusable full-face visors or goggles.

It does not appear that reusable gowns are covered. This is probably because they are for general use anyway regardless of a pandemic.

If you provide VATable services which are not exempt and are likely to reach the £85k threshold (2020), then you will need to register for VAT with HMRC.

Once you are registered you have an obligation to pay VAT. This means you will have to factor it into your prices based on the rate of VAT you are paying, e.g. add on 20% to your price.

HMRC expect that you provide them with information about VAT by submitting a VAT Return to HM Revenue and Customs (HMRC) every three months. This period of time is known as your 'accounting period' . Unfortunately, you will have to provide this regardless of if you have any VAT to pay or claim back. Once registered for VAT this is a requirement you must fulfil.

Once you have your VAT number you can sign up online for the VAT online portal. Here you can submit your VAT return. However, if you have already signed up for Making Tax Digital, the government guidance states that you cannot use your online account to send your VAT return if you've signed up for 'Making Tax Digital' for VAT. Use accounting software that's compatible with Making Tax Digital instead.

The BDA are not regulated to provide financial advice or services, and so you must speak to your accountant in relation to any tax questions you may have specific to your business, including for guidance on VAT. ◆

Available online at: www.gov.uk/government/publications/revenueand-customs-brief-4-2020-temporary-vat-zerorating-of-personal-protective-equipment-ppe/ revenue-and-customs-brief-4-2020-temporaryvat-zero-rating-of-personal-protectiveequipment-ppe

Practice Management Consultant, British Dental Association