VAT apportionment

Because the courts said so and HMRC accepted it. HMRC originally treated dispensing as an integral part of a single taxable supply of spectacles. Following the High Court decisions in Leightons and Eye-Tech in the late 1990s, dispensing — the measuring and fitting — is accepted as a separate supply from the goods, and it is exempt when performed by an optometrist or a dispensing optician. VATVAL12320 dates the change to 1995, following Leightons Ltd (LON/92/2521), and confirms the same principles extend to contact lenses and hearing aids. The same reasoning applies wherever a professional service accompanies goods.

VATHLT2190 asks four questions in sequence. Does the establishment qualify for exemption as a body corporate under s.9 of the Opticians Act 1989? Is it run by a sole proprietor with the necessary qualifications who carries out all the work himself? Is the dispensing actually carried out by an optician qualified under item 1(B)? Is dispensing carried out by unqualified staff but directly supervised by a qualified optician? Answer yes to any and you are partially exempt and apportion. Fail all four and the supply is wholly standard-rated. There is no partial credit in that test — it is all four or none.

Twenty per cent of the entire spectacle price, on every pair, with no exempt dispensing element at all. The research describes it as the single most expensive trap in the sector and that is not overstatement — for a practice of any size the annual figure runs well into five figures. What makes it dangerous is that nothing bounces. The returns are accepted, no penalty arises, and the money is simply never recovered. There is no feedback loop anywhere that would tell you it is wrong.

Yes, and it is set out in Note (2) to Group 7: paragraphs of items 1 and 2 include supplies of services made by a person not registered or enrolled, where the services are wholly performed or directly supervised by a person who is. So dispensing by unqualified staff can still fall within the exemption if the direct supervision requirements are genuinely met. The detail matters — HMRC's direct supervision guidance is at VATHLT2600, and 'directly supervised' means what it says rather than 'a qualified optician is somewhere on the premises'.

No. The whole of the medical test is exempt and VATHLT2190 confirms it is and always has been — the sight test, slit lamp examination of the cornea, keratometry measurement of corneal curvature and the glaucoma test. The apportionment question only arises on what follows: the spectacles, where standard-rated goods and exempt dispensing have to be separated from a single price the patient pays. The test is never the hard part — the dispensing bench is. Ask what basis your practice currently uses; if nobody can say, that is the answer.