In a recent VAT Tribunal case, the Appellant performed hair transplant treatments that it considered qualified for VAT exemption as a medical service.

The Tribunal held that there were no findings by a medically qualified practitioner that any of its patients had suffered any psychological or psychiatric condition and thus the hair transplant was subsequently identified as a therapeutic treatment. Therefore, the treatments were regarded as purely cosmetic and were VATable supply at the standard rate.

If a business in this sector wants to identify whether its services are classed as VATable supply, it should review each treatment that it performs based on its individual merits. HMRC will generally accept that services qualify for VAT-exempt treatment where they are undertaken as an element of a healthcare treatment program, and the procedures are undertaken by a medically qualified practitioner.

If your business provides treatments that could be regarded as ‘cosmetic’, I recommend that you contact our free helpline on 0161 477 6600 to discuss the VAT liability of the business's income streams.