What’s the VAT liability of Botox, Cosmetic Treatments?

Certainly this is an area of business growth on the High Street in recent years. Providers include medically registered practitioners who have diversified into the marketplace as well. A recent case in the First Tier VAT Tribunal considered the VAT treatment that should be applied to their treatment fees. The business concerned, Illuminate Skin Clinics Ltd, provided a range of skincare treatments, from fillers to chemical peels and facials.

The company had treated certain of its services in this area as VAT exempt and whilst it had been VAT registered until May 2017, it had then deregistered. HMRC visited the business in February 2019 and raised an assessment for input tax that it saw as overclaimed in the VAT returns to December 2016 as well as for underpaid output tax. The case for the taxpayer was presented by the well regarded Counsel, Melanie Hall KC – and the grounds for appeals were in the area of whether the provision of cosmetic treatments could still fall to be regarded as “medical care” and within the scope of UK VAT exemption under VATA 1994, Schedule 9, Group 7, Item 1.

This provides VAT exemption for:

“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….”

Previous cases at the First Tier tribunal have gone through a similar analysis – notably Ultralase Medical Aesthetics Ltd, Skin Rich Ltd and Window to the Womb (franchise) Ltd and whilst there are always variable elements in the situation under discussion, there has been a degree of consistency from the Tribunal in it’s interpretation of what is meant by “medical care” in this context.

The business’s position was that the primary purpose of the treatments it provided was “the protection, maintenance or restoration of the health of the person concerned” however, its arguments and evidence were insufficient to persuade the Tribunal and the decision was that the specific services at issue were not VAT exempt medical care and were taxable supplies even where provided by a medically registered practitioner.

As ever if this should trigger a VAT liability question with your business or the clients that you advise then don’t hesitate to get in touch with Xeinadin’s Indirect Tax team here at Centurion – Indirecttax@xeinadin.com is our new email address.

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