On 23 June 2026, HMRC published the Tax Update 2026: Simplification, Modernisation and Fairness, a package of 40 measures, several of which directly impact VAT, e-invoicing, customs and indirect tax compliance.
Summary
- Announced via Written Ministerial Statement HCWS141 on 23 June 2026, the Government will change HMRC’s approach to VAT on medicines supplied free of charge under compassionate-use, expanded-access and early-access programmes.
- The previous HMRC position treated such supplies as deemed taxable supplies with VAT due on cost-build-up, generating substantial assessments and prolonged disputes with pharma manufacturers; the new approach removes this charge either via VAT rule changes or a reimbursement scheme.
- Effective for supplies of medicines from 23 June 2026 onwards; pharma VAT teams should review open assessments, pending appeals and internal accruals for deemed supplies to recalibrate provisioning and reclaim positions where appropriate.
Article Following sustained representations from the pharma sector, the Exchequer Secretary confirmed that HMRC will change its approach — either via VAT rule changes or a reimbursement scheme — to remove the VAT charge on compassionate-use and early-access medicine supplies. This resolves a long-running area of dispute (with ongoing enquiries and assessments) and is welcome news for life-sciences VAT teams.
Primary Sources
- GOV.UK – Tax Update 2026 summary (HMRC policy paper) [gov.uk]
- GOV.UK – Tax Update 2026 collection (all consultations & documents) [gov.uk]
- Written Ministerial Statement HCWS141 – 23 June 2026 [questions-…liament.uk]
- Deloitte – Weekly VAT News, 29 June 2026 [taxscape.d…loitte.com]
- KPMG UK – Tax Update 2026 commentary [kpmg.com]
- Deeks VAT Consultancy – Tax Update 2026 for VAT, indirect tax and customs [deeksvat.co.uk]
- Kreston Reeves – Tax Update June 2026 [krestonreeves.com]
- Chartered Institute of Taxation (CIOT) – HMRC Tax Update June 2026 [tax.org.uk]
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