A recent VAT tribunal decision has led to headlines such as “Botox is not a medical procedure so VAT will have to be added”. However, this is not necessarily the correct interpretation and caution should be exercised.
Skin Rich lost at a VAT tribunal in June 2019 because some of its treatments were not diagnosed by a medical professional and for those that were, the court was not satisfied that the evidence produced was sufficient to prove a medical purpose for the treatments.
The test for medical exemption in relation to VAT remains the same; the supply must be made by a person on a medical register, or someone supervised by that person, and the treatment must be one of medical care. The appropriate records must be kept to evidence these treatments and their purpose, and it is on this evidence that HMRC will rely.
The Court agreed that a treatment may have a cosmetic benefit but this does not preclude it also having the principal purpose of protecting, maintaining or restoring health. This should have resulted in an agreement to VAT exemption except that the Court went on to say “on the facts we do not find that this principal purpose has been established”. The issue was ultimately one of record keeping and evidence.
On a more positive light, the case clarified that it is not necessary for medical practitioners to have detailed specialisms on their medical registrations in order to demonstrate the required expertise. They do, however, have to provide other evidence to demonstrate their qualifications, experience and training.
Also, the discussion around the provision of care in any hospital or state regulated institution provided some useful insights. In this circumstance, where injectables “were administered by trained practitioners to improve a client’s appearance and make them feel better about themselves,…such treatment is of a medical nature and can comprise ‘care’”. This is useful for Care Quality Commission (CQC) or Healthcare Improvement Scotland (HIS) registered clinics.
Our advice continues to be for businesses to look very carefully at their record keeping and evidence of medical purpose. There are no shortcuts. Where you can clearly evidence a medical purpose then VAT is exempt.
If you have any queries, please speak to your usual Campbell Dallas advisor.
0141 886 6644
The information in this blog should not be regarded as financial advice. This is based on our understanding in September 2019. Laws and tax rules may change in the future.