HMRC win case governing VAT exemption of cosmetic treatments

The First Tier Tax Tribunal has found in favour of HMRC in the VAT case of Illuminate Skin Clinics Ltd, a case looking at whether cosmetic treatments can be exempt from VAT. The provision of healthcare services by a doctor, nurse or other person enrolled on a statutory register can be exempt only where the primary purpose of the services is the protection, maintenance or restoration of the health of the person concerned.

The Tribunal found that although Illuminate Skin Clinics Ltd was run by a qualified doctor, there was no diagnosis of a health disorder or disease, no referral from a doctor or other medical practitioner, no notes showing evidence of diagnosis and no healthcare or treatment plan to support a claim to exemption. The Tribunal decided that these would be ‘potentially capable of supporting a claim to the exemption’. The Tribunal also considered whether the fact that cosmetic procedures were carried out because the patient was suffering mental distress was sufficient to exempt the services. The Tribunal found ‘Helping someone to achieve goals in relation to their appearance - which is what this clinic does - is not treating someone's mental health status, but is going to their self-esteem and self-confidence. It is a misuse of language to say that this is healthcare in the sense that it would fall within’ the VAT exemption.

The Tribunal concluded "If what is being done is not "diagnosing, treating and, in so far as possible, curing diseases or health disorders", then neither the provision of a pre-treatment consultation, nor being asked about previous medical history, or body image, or psychological/emotional challenge, turn what is being done into medical care, or change its tax status to exempt.’