We’ve written before on the topic of VAT and cosmetic treatments (particularly facial aesthetics), but a 2019 First Tier Tribunal (FTT) case may serve to provide some clarity on the matter.

The Skin Rich case centred around a claim by HMRC that VAT should be applied to Facial Aesthetic treatments, specifically Injectables (“Botox and dermal fillers”) as well as other cosmetic surgery treatments.

When is a sale exempt from VAT?
It is a reasonable stance to take that a sale will incur VAT unless you can find a valid reason not to.

In this respect, a specific group of VAT exemptions for health services exists, and this particular case dealt with a few specifics of the exemption. It is therefore a very useful case. To summarise the findings, the FTT found that:

• The provision of Facial Aesthetic Injectables (Botox and other soft tissue fillers) cannot be said to have a primary purpose of “protecting, maintaining or restoring human health” and so cannot be “medical care”;
• For the exemption to apply, such medical treatments must therefore be “care or medical or surgical treatment”. The FTT agreed that this is the case.

This is a very important distinction as the latter requires that the treatment be provided by a hospital or state-regulated institution. This is where Skin Rich Ltd fell short, as they were not operating within a CQC-regulated industry.

For better or worse, dental practices must be registered with the CQC and so can rely on this argument to apply for the exemption.

Perhaps more importantly the FTT decision does confirm that, provided other conditions are met, aesthetic treatments can have a primary purpose of a cosmetic nature and still qualify for the VAT exemption.

Although the Skin Rich case dealt with facial and other aesthetic treatments, the principles are now enshrined in case law and apply equally to cosmetic dental treatments. The other conditions required for the healthcare VAT exemption to apply must also be met.

The benefit to dentists
Overall, this gives a clear commercial advantage over high-street competition and beauty clinics which will have to charge VAT on similar treatments (once their total turnover exceeds the VAT threshold of £85k).

It has long been Hive’s view that cosmetic treatment, especially Facial Aesthetics carried a certain amount of risk regarding VAT. This decision does provide some reassurance on the subject, although we would still endorse further protective action to mitigate risk in an area that HMRC is focused on.

Get in touch to discuss how we can help take advantage of this and what safeguarding can be employed.