Cosmetic treatments and procedures, from creams to Botox and surgery, are becoming ever more popular and accessible, as the high street sees an explosion of offerings from non-medical providers through to some of the best surgeons the country has to offer. Celebrity lifestyles and social media encourage us to live our best lives, with many of us deciding we only live once, and the price, whilst not always the cheapest, is affordable.
However, sometimes the price might not be all we think it is. Many providers may believe their treatments are VAT exempt as medical care, particularly for the more involved procedures performed by registered medical professionals and/or registered surgeons. Would that it were so!”
Treatments and procedures that are purely (or even just primarily) cosmetic in nature and motivation are subject to VAT at 20%. If you have a patient who has saved up and paid, it is very difficult to ask them to pay an unexpected extra 20%, and HMRC will require this from you out of funds received, impacting revenue, margins and profits.
The difficulty is deciding what is cosmetic and what is qualifying medical treatment for the purposes of the VAT law, which doesn’t necessarily coincide with medical and regulatory rules.
Tax is a challenge, but VAT law is notorious for having its own obscure logic and operates at a tangent to common sense, often catching even the brightest and most qualified. Businesses operating for many years are at risk of being assessed for VAT owed going back 4 years (if already VAT registered), and up to 20 years if not, …or if HMRC allege fraud…before we start counting the penalties. The consequences can cause a severe impact on success.
Whilst recent VAT case law has provided some reasons to smile, these are rare and niche victories which don’t impact the underlying cosmetic vs medical analysis.
What can be done? As my doctor keeps telling me, if in doubt, check it out! At whatever stage of the business cycle, from initial start-up to well-established concern, we can help. The sooner we can see you, the sooner we can identify issues, discuss options and start our own VAT mitigation treatments.
This blog was written by Richard Collier.
Richard Collier, VAT Director
Richard is a VAT Director with over 30 years’ experience advising on complex VAT matters across a wide range of sectors. He supports businesses and individuals on everything from day-to-day VAT queries to large-scale, high-value issues, including cross-border transactions, structuring, and HMRC enquiries. Richard takes a proactive, practical approach to managing VAT risk and is experienced in working with HMRC on complex or contentious matters. If you have any VAT-related queries or would like to discuss your position, you can email Richard at richard.collier@groupams.co.uk.
