The UK healthcare and pharmaceutical sector is standing at a major financial and regulatory turning point. A landmark legal case involving Boehringer Ingelheim has the potential to reshape how VAT is treated across the life sciences industry, impacting drug manufacturers, wholesalers, importers, and any organisation participating in UK or EU pricing schemes.
At the heart of this issue lies a key question:
“Are mandatory and voluntary pricing scheme payments actually post-supply price reductions, and therefore eligible for VAT adjustment?”
The First Tier Tribunal (FTT) said yes. HMRC says not so fast. And now, with the Upper Tribunal hearing imminent, the outcome could unlock billions of pounds in VAT reclaims.
This is one of those moments where a legal ruling could open the door to a genuine, tangible recovery for the sector.
THE BACKGROUND: VPAG, PPRS, AND THE BOEHRINGER CASE
In 2024, Boehringer Ingelheim challenged HMRC in the UK First Tier Tribunal (FTT). Their argument was simple, but important:
Payments made under VPAG, PPRS and similar schemes are not just regulatory charges, they are post-supply price reductions.
In other words, when a pharma company supplies medicines to the NHS and later pays money back under these schemes, the true value of that original supply is reduced.
And under Article 90 of the EU VAT Directive, when the price of a supply is reduced after the sale, the VAT should be adjusted too.
The FTT agreed with Boehringer.
HMRC has now appealed the decision, and the Upper Tier Tribunal (UTT) hearing is scheduled for 9–11 February, with a decision expected shortly after.
This means we are at a critical moment.
WHY THIS MATTERS SO MUCH
Across the UK, it’s estimated that £2.5 billion of VAT is at stake.
This isn’t a technical footnote; it’s a potential sector-wide VAT correction. If the Upper Tribunal agrees with the First Tier ruling, it confirms that:
- These payments are not taxes or penalties
- They are rebates on the original price
- And therefore, the VAT originally paid was too high
This means you may be entitled to claim VAT back.
WHAT THIS COULD MEAN FOR YOU
If your business makes payments under:
- VPAG
- PPRS
- Or any similar pricing or clawback scheme
You may now be able to:
- Adjust the VAT on your original supplies
- Reclaim overpaid VAT
- Correct historic VAT positions
- Improve cash flow
- Strengthen compliance
And if you operate across Europe, there’s a strong chance this logic may also apply to EU pricing schemes too.
THE TIME LIMIT YOU NEED TO KNOW ABOUT
There is one really key point; you can only adjust VAT going back four years.
Every VAT period that passes reduces what you can recover. That means if you wait until the final tribunal decision, you could permanently lose part of your claim.
This is why we’re encouraging businesses to submit a protective claim now, so you can be “stood behind” the tribunal outcome and preserve your entitlement.
WHAT DOES ‘STANDING BEHIND THE DECISION’ MEAN?
It simply means you:
- Notify HMRC that you are impacted
- Register your potential claim
- Protect your position
- And preserve your right to recover VAT once the final ruling is confirmed
WHY I’M SO PASSIONATE ABOUT THIS
I’ve spent years working with healthcare and pharma businesses, and I know how complex pricing, rebates, and scheme mechanics can be.
What excites me about this case is that it aligns the VAT position with commercial reality.
You didn’t receive the full sale price, so why should you pay VAT as if you did?
HOW WE CAN HELP
My team and I can:
- Review your scheme payments
- Map them back to original supplies
- Quantify your potential VAT recovery
- Prepare and submit protective claims
- Handle HMRC correspondence
- Monitor the tribunal decision
- And keep you updated every step of the way
Once you’re in touch, it becomes our priority to protect your recovery and keep you informed.
LET’S TALK
If this sounds relevant to you, I’d love to have a conversation – get in touch with me.
Even if you’re not sure yet, a quick chat could help you understand whether you’re impacted and what your options are.
This case has the potential to be one of the most significant VAT developments the pharma sector has seen in years.
You don’t need to navigate it alone. Let’s make sure you don’t miss out.
