Management: Taxing times

In October last year, HMRC announced it would be implementing simpler processes to be used by opticians and dispensers of hearing aids to account for VAT on their supplies. Opticians that dispense glasses or contact lenses to their customers make two supplies for VAT purposes: the spectacles or lenses themselves, which are taxable at the standard rate, and the supply of dispensing services, which is completely exempt from VAT.

Prior to the changes coming about, opticians would have to account for VAT on the taxable element of their sales by either using separately disclosed charges for each supply, notifying each separate charge to the customer at the time of sale, or by charging a single price to the customer and making a fair and reasonable apportionment of the income between the taxable and exempt elements of the supply, using a method of their choice, which would have to be approved by HMRC.