DUE TO THE rapid growth of the private cosmetic medical sector in the UK, some noticeable shifts have begun to appear in HMRC’s approach to VAT in the cosmetic medical sector. HMRC have reportedly now established a dedicated team to examine the VAT implications of treatments such as Botox, skin fillers and facial peels.
In today’s Shipleys Tax brief, we consider whether HMRC’s position is now seemingly leaning towards categorizing certain treatments as standard-rated for VAT rather than exempt.
Historical Stance vs. Current Direction
While traditionally, treatments aimed at medical purposes have often been exempt from VAT, those perceived as purely cosmetic have leaned towards being standard rated (20%). This distinct separation is becoming more blurred. Procedures that serve dual purposes, such as Botox, now find themselves in a VAT grey area. There’s a growing inclination from HMRC to classify certain ambiguous cosmetic treatments as standard-rated unless they solidly fit within the medical exemption.
There’s a growing inclination from HMRC to classify certain ambiguous cosmetic treatments as standard-rated unless they solidly fit within the medical exemption.
Recent court case
In one recent tribunal case involving a prominent skin clinic, these VAT issues were brought to the forefront. The clinic had applied for a VAT credit for a specific timeframe, a claim which HMRC challenged asserting that the services during that period were not exempt from VAT.
During the tribunal, a wealth of evidence was presented, including testimonies from the clinic’s lead practitioner, a highly qualified registered medical professional who had pivoted to ‘aesthetic medicine’ and operated the clinic, offering an array of cosmetic treatments.
While the tribunal acknowledged the lead practitioner’s expertise and dedication to professional ethics, it ruled that that cosmetic treatments provided by the clinic did not qualify for VAT medical exemption. It found that the treatments were for “aesthetic reasons” and not for clinical reasons.
The Impact
This evolving stance means that businesses offering cosmetic treatments need to be extra vigilant. The ruling underscores the importance of the nature and intent behind services in determining VAT status, emphasizing the need for meticulous record-keeping and understanding of HMRC’s evolving views on VAT exemptions in the cosmetic medical sector.
…cosmetic treatments provided by the clinic did not qualify for VAT medical exemption. It found that the treatments were for “aesthetic reasons” and not for clinical reasons.
How Shipleys Tax can help
With the landscape shifting, our Shipleys VAT team can help ensure that your practice remains compliant, anticipating and adapting to any changes in HMRC’s perspective on VAT within the sector.
Adapting to change is vital in today’s dynamic environment and ensuring your practice stays ahead and compliant is crucial to avoid falling foul of the legislation.
If you would like assistance, or would like more information, please call 0114 272 4984 or email info@shipleystax.com.
Please note that Shipleys Tax do not give free advice by email or telephone.
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