Botox and other cosmetic services have proliferated on High Streets in recent years, and it’s been lucrative enough for many medically registered practitioners to be drawn into the marketplace.
However, a recent VAT ruling demands consideration – and we recommend that any affected businesses seek advice immediately.
Illuminate Skin Clinics Ltd. – much like many similar businesses – provided a range of skincare treatments, ranging from fillers to chemical peels and facials. It had been VAT registered, but having considered its services to be VAT exempt, it deregistered in May 2017.
Enter HMRC.
VAT inspectors visited the business in February 2019 and raised an assessment for overclaimed input tax to December 2016, as well as for underpaid Output Tax. The inspectors felt that Illuminate’s treatments would benefit from a little VAT treatment.
At the First Tier Tribunal, the well-regarded Counsel, Melanie Hall KC appealed on Illuminate’s behalf, on the grounds that such cosmetic treatments could be considered “medical care” and therefore exempt from UK VAT.
The primary purpose of the treatments, she submitted, was “the protection, maintenance or restoration of the health of the person concerned”.
In support of her argument, Ms Hall quoted VATA 1994, Schedule 9, Group 7, Item 1, which states:
“The supply of services consisting in the provision of medical care by a person registered or enrolled in any of the following:
(i) The register of medical practitioners….”
However, despite the fact that medical practitioners may have been supplying the services, the Tribunal could not be persuaded that said services could be termed ‘medical care’.
This, of course, will have repercussions throughout the industry: Just because your services are provided by a medically registered practitioner, it doesn’t make them ‘VAT-exempt medical care’.
But of course, there is hope, because each case must be decided on its own merits – and other cases have gone through a similar analysis. So if you find yourself in this grey area (or, indeed, you feel it puts you in the sights of a certain VAT liability), please get in touch with Xeinadin’s Indirect Tax team.
