Victory for HMRC in pharmaceuticals VAT appeal

The UT has overturned the FTT decision, holding that the payments made by BIL to the Department of Health and Social Care under the PPRS/VPAS voluntary schemes do not operate as a retrospective price reduction on supplies of medicines by BIL for the purposes of Article 90 of the Principal VAT Directive. HMRC’s refusal of BIL’s overpayment claims of approximately £21.5 million for periods 1 April 2014 to 30 September 2020 was therefore upheld.   

Further, the UT held that even if Article 90 could apply in principle, it would not do so where the final supply of the medicines was zero rated, accepting HMRC’s submissions that this point is determined by Commission v Germany (Case C-427/98). 

This litigation has significant importance for the pharmaceutical industry, and there are numerous other appeals awaiting the outcome of this appeal. 

John Brinsmead-Stockham KC and Sarah Black appeared for HMRC. 

The decision can be found here: [2026] UKUT 00135 (TCC)