VAT on Facial Aesthetics – The Run Down
VAT on Facial Aesthetics – The Run Down
As a rule, when a service or product is provided for healthcare reasons, it immediately becomes exempt from VAT.
April 2, 2018

By Connor Smith, Accountant at Hive Business

As dentistry becomes an ever more competitive industry, owners are naturally looking for an edge over their neighbours; something to make their practice stand out from the crowd.

As social media and influencers continue to permeate our every day lives it will come as no surprise to learn that one of the biggest emerging markets within dentistry is facial aesthetics;  anti-wrinkle treatments through to non-invasive liposuction, dental surgeries across the country are redefining expectations of what your local practice can provide.

High-value implant treatments will draw in an older market, whilst dermal fillers will pull in a younger market, eager to share their enhancements on Instagram; a great indirect marketing campaign. So, this means good news for owners looking to grow their revenue through a different market, right?  Well, when it comes to tax, surprisingly, it is often the case that things aren’t always as clinical. There’s a potential VAT time bomb ticking for practices providing facial aesthetic services.

As a rule, when a service or product is provided for healthcare reasons, it immediately becomes exempt from VAT. ‘Healthcare’ is easy to define when referring to general dental work, as no one can argue against the obvious health benefits from something as small as a filling right the way up to dental implants. When it comes to applying the term ‘healthcare’ to lip fillers, the waters become a whole lot muddier.

HMRC and healthcare professionals have mused over this question for a while now, with the argument appearing to boil down to the psychological benefit individuals having this cosmetic surgery will enjoy. If facial aesthetic work improves the mental health of the individual, should this therefore not be defined as the provision of healthcare, exempt from VAT?

A European Court of Justice ruling in 2012 agreed that facial aesthetic treatment could indeed provide psychological health benefits to the patient, even if they aren’t aware of it. A decisive blow to any HMRC argument it would seem, however just because some treatments provide healthcare benefits, you’ll have a hard time convincing anybody that they all do and those that don’t will attract VAT. Furthermore, with the Brexit arrangements continuing to slowly simmer in the background, there is the very real possibility that a hard Brexit and separation from European Courts of Justice may result in the overruling of a few tax decisions HMRC are less than thrilled with.

Of course, this worry is only relevant if the total revenue generated from facial aesthetics at the practice begins to creep up to the VAT registration threshold (currently £85k), but if your practice is considering seriously investing in this line of work you need to start considering the structure of your business to mitigate liability.

If you already provide facial aesthetic work at your practice, or perhaps are looking to invest in the area and want to discuss its implications for your business, please get in touch on 01872 300232 or email us at hello@hivebusiness.co.uk.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Team Hive
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