UK clarifies interim VAT treatment of free medicines after clinical trials

The continued-treatment route is specific

The guidance covers a patient who took part in an MHRA-authorised clinical trial and receives the same medicine free of charge for continued treatment. The route can apply whether or not the supplier previously committed to provide the medicine. NHS-provided, commissioned or funded treatment may instead fall within the NHS provisions; other free supplies do not automatically qualify.^[1][2]

Clause 53 is not yet enacted

Finance Bill 2026–27 clause 53 would insert items 1ZA to 1ZC into Group 12 of Schedule 8 to the Value Added Tax Act 1994 for qualifying no-consideration supplies used in clinical trials, NHS treatment and specified continued treatment. Parliament’s current page records Bill 173 as introduced on 4 November and awaiting second reading. Royal Assent and final wording have not been verified.^[2][4]

HMRC describes an interim administrative treatment

The bill proposes effect for supplies made on or after 23 June 2026. Pending enactment, HMRC says it will not require output VAT on supplies meeting the stated conditions and may process eligible error-correction notices. That administrative position does not convert the bill into enacted law or establish that every free medicine qualifies.^[1][2][3]

Suppliers and importers should verify the qualifying purpose, product and patient, retain the recipient certificate and supporting evidence, and distinguish no-charge supplies from later supplies for consideration. Businesses that accounted for VAT on potentially qualifying supplies from 23 June to 27 October should review HMRC’s correction route. Royal Assent, final statutory wording and any later certificate or correction changes remain separate reopen conditions. Import records should identify the intended qualifying use at the point of import, and controls should flag any later change of use because a certificate alone does not displace the substantive conditions.^[1][2][3][4]