A clinical trial is usually an analytical testing service of a drug or treatment to provide evidence of its performance. A clinical trial is not by itself medical research but could potentially contribute to a larger medical research project.

Registered health professionals may become involved in the trialling of new drugs at various stages of the process. To determine the VAT liability of UoB income, firstly we need to ascertain the details of what is being supplied, to whom the supply is being made, and then to determine whether the supply is essentially (a), (b), or (c):

(a) an analytical testing service (usually a supply of services to funder if commercial entity)

When a company conducts a clinical trial to test the efficacy of a new product, it may contract with another organisation to undertake what is essentially an analytical testing service.

Typically, the drugs will be distributed to patients who have agreed to trial them. Samples of those patients’ blood or urine will be analysed by a testing company which, in most cases, has had little or no contact with the patients themselves.

In this situation the supply of the clinical trial by the testing company will be VAT standard rated because a registered health practitioner (even if involved in the supply) is not performing services that meet the medical care criteria set out in HMRC internal guidance VATHLT2010.

(b) comprises (i) significant elements of medical care (ii) performed by registered health professionals, see VATHLT2010. Can be VAT exempt in certain circumstances.

(c) combination of (a) or (b) as part of a larger medical research project. Can be outside the scope of VAT in certain circumstances.