An industry expert says contractors can make reasonable savings from the sale of face masks even as government advice on the public wearing them is set to be updated.
Veni Harania MBE told Pharmacy Business that there is ample stock of face masks for the time being and that independent pharmacies should make use of a temporary VAT waiver announced by the government.
HM Treasury announced last week that tax on personal protective equipment (PPE), such as face masks and gowns, would be zero-rated for VAT from May 1 to July 31, 2020.
Availing of the waiver will likely save community pharmacies significant amounts of money over the three-month period, depending on number of items sold, he said.
“To put into context, if the VAT output is not accounted for properly, one could unnecessarily overpay a significant amount, which will be a loss of profit.”
Harania advises pharmacists to estimate their stocks as on May 1 which they could have bought paying at the standard rate.
“Your sales of these will be zero rated until all such stock is exhausted. You need to treat these sales in the same way as you do for private prescriptions, where you buy standard rated and sell zero rated,” he said, adding: “Any new stock will come at zero rated until the end of July.”
He notes that pharmacists will need to treat this in the same manner as they would treat zero-rated purchases like drinks and zero-rated sales using the same formula in the normal cash register.
However, pharmacists may need to revise their formula temporarily if they are selling quite a lot of masks, and if using Epos, contractors should enter the sales in the same department as private prescriptions and Tena sales.
“You can now reduce your price of the present stock by 16 per cent and make the same profit.”
He warns that pharmacists should always take advice from their accountants.