Implications of the Boehringer Ingelheim case

There is a wide plethora of rebate mechanisms that are often used by businesses to reward customers for buying in bulk for performance related activities or as a mechanism to help control costs. The corresponding VAT treatment of rebate schemes can be surprisingly complex and challenging to navigate.

I examine the recent and interesting case of Boehringer Ingelheim Ltd (TC9329) (BIL) who is party to a little-known rebate scheme operated by the Department of Health and Social Care (DHSC). The numbers involved may surprise many and subject to HMRC being unsuccessful in any appeal could present a significant financial problem for the government.

The ‘VPAG’ scheme

The voluntary scheme for branded medicines pricing and access (VPAG) which replaced the pharmaceutical price regulation scheme (PPRS) is designed to ensure NHS patients can access the best available and cost-effective medicines while balancing support for innovation in...