Veterinary CT scanner finance for first opinion and referral practices

Veterinary services are standard-rated for VAT, so a VAT-registered practice reclaims the VAT on a scanner. On hire purchase the VAT is normally paid at the outset and recovered on the next return, which makes the real cost a short cash flow gap rather than a permanent one, and some lenders will fund the VAT over a few months to close it. That is why hire purchase, which also lets the practice claim capital allowances, is the usual route for veterinary CT, where a dental or medical practice buying the same machine would often lease it. The Annual Investment Allowance lets most practices deduct the full cost of the scanner in the year of purchase; asset finance and capital allowances explains how. If the VAT on a large order is a strain, a short VAT loan can bridge it.

Illustration only, with round hypothetical figures. A five-vet small animal practice refers a steady number of cases a month for CT and has two surgeons who want to keep the orthopaedic work. It is quoted £160,000 plus VAT for a multi-slice scanner with injector, workstation and software, and £40,000 for the radiation protection adviser's room design, shielding, electrical supply and cooling. The purchase is arranged like this.

• The £160,000 scanner goes on hire purchase over six years with a £16,000 deposit, so £144,000 is financed and the practice owns the scanner after the final payment and claims capital allowances on it.
• VAT of £32,000 is due at the outset. The practice is VAT registered and reclaims it on the next return, and the lender agrees to fund the £32,000 over three months so the practice does not have to find it from cash.
• The £40,000 of room works goes on an unsecured term loan over four years with personal guarantees from the two principals.
• The practice already runs its analysers under a reagent agreement with two years left, which the lender treats as an existing commitment. Its question is whether current profit, plus a cautious estimate of the scan and surgery fees retained in-house, covers both new repayments and the reagent commitment with room to spare.

A six-year term reflects the working life of a new scanner. A refurbished unit would usually be funded over a shorter term. Monthly figures depend on the lender, which is why we show practices more than one offer before they sign the supplier's paperwork.

• The supplier's quote, showing scanner, ancillary kit, software, installation and training separately
• The last two years of accounts and recent management figures
• Three to six months of business bank statements
• A schedule of existing finance, lease and reagent agreements with end dates and any minimum spend
• The radiation protection adviser's room specification and the building works quote
• A short case for the scanner, such as monthly referrals out and the fees expected to stay in-house
• For a refurbished scanner, its age, slice count, tube usage, service history and proof of the seller's ownership

Our guide to the cost of setting up a veterinary practice puts CT in the context of a whole fit-out.

New multi-slice scanners carry the longest terms and the fullest service cover. Compact units designed for veterinary use cost less, need less room preparation and are increasingly common in first opinion practice. Refurbished human scanners from a recognised dealer are widely financed, usually over a shorter term, and lenders will want to know the tube usage and whether the manufacturer still supports the software. Private sales of older scanners are the hardest to fund. A practice that already owns its imaging outright can release cash from it through sale and leaseback, and for imaging across healthcare generally see medical equipment finance and used equipment finance.

A CT earns only if the cases come through and the practice has the surgical capacity to act on the images, so be honest about numbers before committing to a six-year agreement. Budget for the service contract and an eventual tube replacement, which continue whether or not the finance does. Check whether a lease has a secondary rental period that runs on until you give notice, and whether a service contract has been bundled into the finance. Make sure the radiation protection adviser has signed off the room before the scanner is ordered. A practice that adds several equipment agreements can find lenders offer less when it later wants to buy a second site or sell; see veterinary practice acquisition finance. If the case numbers for CT are thin, a referral relationship may be cheaper than owning the machine.