VAT liability on cosmetic treatmments

In recent months we have received a number of calls enquiring about the VAT liability on cosmetic treatments. To put it simply is the supply of cosmetic treatments “medical care” or not?

In Aesthetic-doctor.com Ltd v HMRC [2024] TC09030, the First Tier Tribunal (FTT) found that a private medical clinic offering cosmetic treatments was not providing medical care. Its supplies were therefore standard rated for VAT.

Background

Aesthetic-doctor.com Ltd (ADCL) is a private medical clinic providing a wide range of cosmetic services such as botox, facial volumising fillers, dermal fillers, and laser treatments primarily used for the repair of sun or sunbed damage.

ADCL’s sole owner and director was Dr McKeown, a qualified doctor registered with the General Medical Council and the British College of Aesthetic Medicine.

Following a VAT enquiry, HMRC to the view that ADCL’s supplies were purely cosmetic and did not constitute medical care, which would have been exempt from VAT. HMRC issued a decision notice that ADCL was required to Register for VAT, having made taxable supplies over the VAT threshold.

VAT legislation

Item 1, Group 7, of Schedule 9 of the VAT Act 1994 exempts the supply of services consisting of the provision of medical care by certain registered medical practitioners. Medical care in this context means diagnosing, treating and, in so far as possible, curing diseases or health disorders.

VAT Tribunal

The VAT Tribunal found that the services provided by ADCL were not, in the round, medical care. Establishing the facts in this case was far from straightforward.

No accurate picture of ADCL’s activities in any period was provided and there was no credible or coherent evidence to establish that ADCL was providing medical care.

While ‘health disorders’, within the meaning of medical care, can encompass psychological issues, ADCL failed to prove the nature and extent of any such issues for individual patients.

Patients chose ADCL’s services because they wished to improve their appearance. ADCL’s website encapsulated that thinking and patient questionnaires showed it to be the case.

Individuals worrying that they were looking older were not suffering from a health disorder.

Ageing is not generally viewed as a disease. Sun and nicotine damage are not part of the ageing process; these are self-inflicted damage.
While sun or nicotine-damaged skin may be a health disorder in cases such as melanoma, in general, they are not.

Although ADCL assisted patients in achieving their goals concerning their appearance in a kind and supportive manner, this was not medical care.

Patients wanted to feel better and look less tired or old; they hoped to achieve greater self-esteem. This did not amount to medical care.

The VAT appeal was dismissed.

The VAT liability on cosmetic treatments in this case was found to be standard rated.  As the burden of proof is on the taxpayer, it is necessary to produce sufficient evidence, when called upon to do so, to support taking a particular view. ADCL was not able to produce adequate evidence to support its supplies being exempt from VAT within the medical care exemption.

VAT guidance

HMRC’s guidance on health and welfare can be found at https://www.gov.uk/guidance/welfare-services-and-goods-notice-7012