FAQs, VAT, Your Invoices and Your Reporting

VAT and Dispensing, a very confusing situation!

PA Items and Your Invoices Explained

By Alastair Carmichael MRPharmS and Greg Bull

Question: I am going through my notes from the PA items, VAT and profitability webinar and I am questioning myself what I need to do:-

Throughout the month I receive all our invoices from Phoenix, Alliance Healthcare and AAH.  Out of these invoices I highlight all the PA Items, these then get entered onto my PA Items spreadsheet so when I receive at the beginning of the following month our Drug Monthly Statement I then have to deduct the PA Items + vat.  I also have to calculate the % of the wholesale discount so that this is correctly divided from Dispensary and PA Items. 

I also have to deduct Net PA Items and Vat PA Items to then give me our correct Drugs for dispensing and Drugs for PA costs. Should I be highlighting the HMRC PA Items or the PA Items NHSBSA? Ie:

When calculating our Drugs Income throughout the month so that I have a approx. figure for our income I also have another spread sheet that gives me (hopefully again) the figure for Basic costs total, discount rate, Vat Rate, Vat amount and fees with a total claim value for the month.  Am I right in thinking this should be PA Items list from NHSBSA?


Crucial element of the presentation was to show practices that they do NOT need to deduct the VAT (from their reclaim) for items that have been taken away from the surgery – even though NHS may call them “PA”. Examples: insulin, Clexane, Metoject.

From the invoices, the items that should be highlighted as NOT to have VAT reclaimed are those which have been administered in the practice – examples: Prostap, Zoladex, Flu jabs, Depo-Medrone injections.

With respect to how you account for the Drug Costs – I think I would need to see in person to comment further!

Question: Forgive the question… Should I therefore be marking all insulins on my invoices as PAs before I send them to our Finance manager?


For HMRC purposes these [insulin] are take away items and so VAT is fully reclaimable from HMRC.

For NHS Rx purposes these are considered PA items so you will get the Vat element after clawback paid to you automatically.

So, no you wouldn’t note the PA on those invoices.

ONLY those items applied or injected at the surgery are considered PA by HMRC and it is those invoices you should be highlighting 😊

If you have VAT queries please email contact@dispensingdoctorexperts.co.uk