A recent tribunal decision has again highlighted the fact that practitioners in the field of skin care and related areas can only VAT exempt supplies that meet the criteria to be classed as a health care service that is intended to protect, restore or maintain an individual’s physical or mental health.
This topic has been subject to some debate within the industry as many practitioners rely on arguing exemption applies on the basis of a perceived mental health care benefit rather than a physical one.
In the case of Skin Rich Limited HMRC issued an assessment for VAT of £21,064 for supplies of injectable treatments such as dermal fillers and Botox, as well as fungus nail treatments made over a three year period by the business. The injectables were administered initially by a nurse practitioner and later by a registered dentist whereas the fungus treatment was delivered using a medical grade laser by individuals who were trained in delivering the treatment but were in themselves not registered medical practitioners.
Unfortunately for the appellant, the Tribunal found in HMRC’s favour and determined that VAT was due. In doing so the Tribunal made some important points which are relevant to any practitioners in this field.
The Tribunal rejected HMRC’s narrow interpretation that a dentist could only be said to be carrying out a medical service within their sphere of expertise if it was a dental service. There was nothing to preclude a dentist providing injections from being seen to perform a service within their field of medical expertise when injecting clients.
The tribunal found that the exemption for medical services was limited to care of a medical or surgical nature rather than a welfare service but that injectable treatments could be seen to be supply of medical care when administered by a registered medical practitioner for a medical purpose.
The tribunal also accepted the evidence presented by a medical practitioner, Dr Lalani, who worked for Skin Care Limited, that there were occasions that patients seeking treatment clearly had issues surrounding their self-esteem. However, as she was not a trained psychiatrist this did effect the weight that the tribunal gave to her assessment of the client’s reason for seeking treatment and commented that:
“ her evidence that client’s are often happier and feel better about themselves after treatment could apply irrespective of the purpose for which the treatment is sought”
Ultimately the Tribunal did not find the appellants argument that the injectables were provided for the purposes of medical care sufficiently convincing as there was no evidence that the patients treated suffered from physical or mental health conditions; instead the primarily purpose of the patient seeking the treatment was to improve their appearance which meant the treatments were cosmetic and therefore subject to VAT.
The tribunal reached this decision by considering a number of factors such as:
- The medical practitioner that provided evidence at Tribunal for the business confirmed that she would deliver the treatment to any patient seeking to improve their appearance, unless she was concerned it was not safe to do so.
- There was evidence that Dr Lalani carried out a medical assessment of the client’s needs but there was no evidence that other medical practioners working for the business and delivering the same treatments carried out a similar medical assessment.
- There was no evidence that the clients had been referred to the appellant by other suitably qualified individuals such as the client’s own GP.
In the case of the fungal treatments the decision was much more clear cut, the business was not a state regulated institution and the people delivering the treatment were not registered medical practioners.
It is not yet known if the decision will be appealed further.
If you or your client’s are likely to be affected by this decision please call our helpline for an initial discussion.
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