Good news for suppliers and purchasers of lab equipment announced - Jacqueline Balian opinion piece
NEC Birmingham Dates

Good news for suppliers and
purchasers of lab equipment announced, Jacqueline Balian opinion piece

 

For over two years, lab industry Trade Association GAMBICA has been raising members’ complaints with HMRC about their guidance on zero rating for VAT. Shortly before Lab Innovations opened in 2023, HMRC finally issued an update to VAT Notice 701/6 which will be a huge help to suppliers and charities buying lab equipment.

GAMBICA’s VAT Group’s lobbying efforts, highlighting the challenges in understanding and implementing the existing guidance, prompted a change of heart from HMRC. This change means that any medical or veterinarian equipment used in research, diagnosis, and treatment, funded by charitable donations or registered charities, can now be considered for zero-rated VAT by the supplier of these goods. “This is a significant 20% cost saving for those eligible bodies on tight research funds but also provides a significant increased return on investment to the UK as each donated £1 goes much further,” says Ben Sunderland, of GAMBICA’s VAT Group.

For lab suppliers, this change levels the playing field and establishes a more universally accepted understanding of what is eligible for zero-rated VAT.The vast majority of GAMBICA’s recommendations on the eligibility for VAT relief of equipment or services purchased for medical or veterinary research have been incorporated in the new version of the guidance.

Ben Sunderland, of GAMBICA’s VAT group, comments: “The new VAT Notice 701/6 clarifies many ambiguities introduced by the previous update versions, in particular to amendments made in the list of examples of qualifying goods. GAMBICA proposed changes to the issue of the VAT Notice published in October 2018 which introduced even more ‘grey areas’ for suppliers.”

“The most important foundation of these discussions was to agree to let suppliers to allow zero rating where possible to enhance the impact of charitable funds.” This is important, as most research bodies are unable to reclaim VAT.

Louise Scattergood, also of the GAMBICA VAT group, said: “The work done by GAMBICA members to facilitate these changes has been done on behalf of universities and hospitals across the UK. It will make research funds go considerably further as well as making the process simpler and clearer for research institutions and their suppliers.”

More detail of what’s changed in the new VAT notice, is available on the GAMBICA website, here. GAMBICA | Lab industry welcomes HMRC clarification on VAT guidance

Lab industry receiving shoddy support from the Government

Exporters at the forefront of the lab industry are among the GAMBICA members whose businesses are being seriously impacted by a failure to adequately staff the UK’s export control functions.

Exhibitors at this year’s Lab Innovations are part of an industry which is hemorrhaging business thanks to excessively long and increasing delays to export licensing decisions by the Export Control Joint Unit. They are suffering lost sales, lost contracts, ongoing loss of reputation and some are considering moving operations out of the UK as they see their business going to competitors in other countries that have more rapid decision processes. Companies have to apply just to find out whether or not they need an export licence for some high tech exports, whether or not they are intended for military use. Even getting a response as to whether or not a licence is needed can take up to ten months, by which time the customer has gone elsewhere, and will probably never come back.

GAMBICA Members are not disputing the need for robust decisions based on national security, but they are disadvantaged by an ECJU (and related government departments involved in the decision process) which is not adequately resourced to support UK exporting businesses in a timely manner to be competitive in an international market. This failure to adequately resource UK export efforts runs completely counter to the government’s stated objectives of increasing exports, accessing new markets and signing Free Trade Agreements.

What does this really mean in practice? Here’s one example of a company experiencing long delays from ECJU. They have several applications with ECJU and the longest has been lying unanswered for over 150 working days. They have another which has been outstanding for over 100 workings days where the customer is now threatening to cancel the order and to exclude them from future tenders. This will result in a loss of several hundred thousand pounds for the current order and risks a pipeline from this customer worth several million pounds more. By the way, ECJU’s own target for dealing with applications is that 70% should be dealt with within 20 working days and 99% within 60.

So what does ECJU say about this? A recent notice from them alerted users of their service that their staff are busy testing their new IT system, LITE, and asks that customers refrain from contacting them.

Another company which is having to consider moving production overseas as it loses business to US, German and Japanese companies serving exactly the same customers comments: “UK national security does not benefit from an approach that incentivises shifting the production of sovereign technology overseas. Ultimately, the UK may no longer maintain manufacturing capacity in certain sectors.”

It’s not just exports to China and India which are affected, another GAMBICA member has applied for 20 export licences to Sri Lanka in 2023 and has had a reply to only two. The same member also has seven outstanding applications for Saudi Arabia and says: “There is no visibility or communication on how long the delays might be, so we cannot advise our customers. We are having to consider no longer exporting to these countries.” In this case the value of exports at risk exceeds £10million.

It is simply shocking that the government is allowing these exports to fail for lack of adequate civil service support. This loss of business will mean these companies cannot afford to invest in further innovation and in the long term will inevitably affect UK jobs.

Even the advice for supporters is sub-standard, one Lab Innovations exhibitor asks: “How can SMEs work on gaining access to new areas when the Government’s documentation is so vastly out of date? The government site which purports to lists all trade barriers with different countries (https://www.check-international-trade-barriers.service.gov.uk/location/?resolved=0) doesn’t even list Russia and this is yet another area in which the government’s trade departments are making it harder and harder though lack of succinct information.”

GAMBICA is making this a focus of its lobbying activity with ministers, shadow ministers and civil servants, if you would like to be involved, get in touch with GAMBICA’s lab sector head, Jacqueline Balian at jacqueline.balian@gambica.org.uk

To join the debates, discover more industry insights, and stay up to date with the latest Lab Innovation news make sure you register your interest for Lab Innovations 2024.

About Lab Innovations

Lab Innovations has fast become the UK’s must-attend event for the entire laboratory industry. Supported by some of the UK’s top science institutions, it is a key event for powering the business of science.

 

The show floor is bursting with innovations from more than 160 leading scientific suppliers and manufacturers showcasing the latest laboratory developments and equipment. Exhibitors present the most cutting-edge technology applicable to a plethora of industries including life sciences, pharmaceuticals, academia, healthcare, chemical, food & drink, cleanroom and more.

About Easyfairs

In 2018 Easyfairs was named Belgium’s “Entrepreneur of the Year®” and a “Great Place to Work”.  For the fourth year running, Deloitte conferred “Best Managed Company” status on Easyfairs in 2022.

Visit the future with Easyfairs and find out more on www.easyfairs.com.

For further information, please contact:

Aleiya Lonsdale                                                                         Patrick Ball & Chloe Luckham

Lab Innovations                                                                        Stone Junction Ltd

aleiya.londsdale@easyfairs.com                      Patrick@stonejunction.co.uk & chloe@stonejunction.co.uk

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