Where an independent's margin actually is
Not in the frame price. An independent cannot out-buy a multiple and will not win a discount war. The margin is in the professional side — the testing, the dispensing, the relationship — and in not handing the exempt element of it to HMRC by failing to apportion.
What we do
- Establish which limb of the VATHLT2190 test you actually satisfy, and evidence it
- Separate GOS, private testing, dispensing and goods in the accounts
- Check your GOS income against the published fee for your nation, including backdated determinations
- Payroll, with the supervision structure understood as the VAT question it also is
Common questions
How do we compete with the multiples?
Not on the price of a frame, which is the fight an independent cannot win. The margin in an independent practice comes from the professional side — the testing, the dispensing, the clinical relationship — and from not giving away the exempt element of it to HMRC by failing to apportion. Getting the VAT position right is frequently worth more to an independent than any buying-group discount it could realistically negotiate, and unlike buying terms it does not depend on scale at all. A single practice can be exactly as correct as a hundred-branch group.
Is our VAT apportionment likely to be wrong?
It is worth checking, because a great many are and nothing ever flags it. The question is whether the practice satisfies the VATHLT2190 test at all — as a body corporate under s.9 of the Opticians Act, as a qualified sole proprietor doing the work, through dispensing actually carried out by a qualified optician, or through unqualified staff under genuine direct supervision. If nobody has ever established which limb you rely on, you are relying on none of them. It is a short piece of work and the highest-value hour most independents could spend. There is no retrospective fix once the accounting period has closed.
What is the biggest cost we can actually control?
Staff, and the way it is structured has a second effect most owners never see. Because the exemption depends on who dispenses and who supervises, the rota changes your VAT position as well as your wage bill. That makes staffing decisions worth modelling properly rather than settling on the basis of cover alone. A cheaper rota that costs you the exemption is not cheaper. That arithmetic is rarely done because the rota and the VAT sit with different people. Model the rota and the VAT position together rather than treating cover as a staffing question with no tax consequences.
Should we do more NHS work or less?
It depends on whether the NHS side carries its own costs, and most practices cannot answer that because GOS income, voucher income and private work are merged in the accounts. Once they are separated the question becomes arithmetic: what does a GOS test earn against what it costs in chair time, and what does the dispensing that follows it contribute. The answer differs enormously by nation, given England pays £24.13 and Wales £46.20. In England the case for volume NHS work is much harder to make than it is in Wales or Scotland.