Compassionate Use Medicine Schemes: VAT

Lord Deben Excerpts

Tuesday 16th June 2026 Lords Chamber

[Baroness Merron (Lab)]

I am sure that the noble Lord would not want me to be quoted as suggesting that VAT should be charged on chocolates given free in shops, so I will not. The way in which VAT is calculated is a long-standing arrangement that companies are aware of. The medicines are treated as taxable deemed supplies, which means that VAT is applied even when no payment is made. VAT is worked out by calculating the value of those products, but if there is nothing similar, then an assumption is made. This is a usual way of dealing with that. I should also emphasise that VAT is a matter for His Majesty’s Treasury and has been for all these decades.

[Lord Deben (Con)]

Can I bring the noble Baroness back to the last part of my noble friend’s question? It looks as though the VAT department in HMRC is behaving most peculiarly. First, it lost the case about VAT on entry to the Great Yorkshire Show, yet it is fighting every single show rather than giving way to what the law says. Secondly, it lost the case about VAT on charging your EV, but it has been putting off taking that in and will now appeal, against all the interests of the Government. Now we have this case. It is perfectly right for the noble Baroness to say that this is a long-standing thing, but can she join with fellow Ministers and say that it is about time that HMRC recognised that it is a public service, that it ought to look at what it is doing and that it ought not to hold up changes which the law has insisted it makes?

[Baroness Merron (Lab)]

Again, I appreciate the invitation to enter into conversations about VAT more widely, which I will resist. Certainly, HMRC is aware of its role. We are trying to find the right way forward with HMRC while the issues are resolved, because patients are at the heart of this. HMRC is already using its discretion to extend deadlines where appropriate and suspend collection of tax if a taxpayer has requested a statutory review. It does not mean that HMRC has changed its mind on past liabilities, but it does mean that, if taxpayers and companies have concerns, they have a direct line to it. We are working carefully and closely with industry, patients, charities and others to find the right way forward as soon as possible.