Treasury to not extend VAT exemption to PPE

Wholesalers expressed disappointment over the Treasury’s decision to not extend the temporary zero rate applied to supplies of personal protective equipment (PPE).

The measure, in effect from 1 May to “relieve the burden of VAT on the price of purchasing PPE used for protection from coronavirus by front line workers”, is scheduled to end on 31 October.

Federation of Wholesale Distributors (FWD) said the Treasury confirmed the exemption on the 20 per cent tax would not continue stating that the cut was primarily intended for businesses in the healthcare and residential care sectors.

“There couldn’t be a worse time to inflict extra costs on the food supply chain,” commented James Bielby, FWD chief executive.

“Wholesalers have been trading at a loss for months because of the restrictions on their hospitality customers. Some of them are have lost 80 per cent of their business and are struggling to maintain their contracts to schools, hospitals and care homes.

“The reasons for introducing a zero rate haven’t changed, and we face months of further COVID-19 measures. It’s disappointing that the zero rate isn’t being continued for as long as COVID restrictions on trade are in place.”

Dawood Pervez, managing director of Bestway Wholesale, warned that the 'surprising' move will be of considerable concern both to retailers and the general public.

“An increase of 20 per cent is a significant amount, and it is a surprising move if we all wish to keep safe and control the pandemic,” he said.

“There is little doubt that increases in price will slow demand and act as a barrier to buy PPE for some, at a time when many peoples’ income has been reduced due to the pandemic, and every penny in their shopping basket counts”.

Eligible health and social care providers can now order PPE through a portal launched by the Department of Health and Social Care in June.