Illuminate Skin Clinic, founded by member of the Aesthetics Clinical Advisory Board, Dr Sophie Shotter, has won a legal appeal at the Upper Tribunal (UT) regarding how VAT applies to aesthetic treatments.
The landmark case centred on whether certain procedures, such as botulinum toxin, dermal fillers and fat reduction treatments, can be classified as exempt “medical care” for VAT purposes when performed by qualified healthcare professionals.
Monckton Chambers, who represented the appellant in this case, has reported that the UT ruling on October 13 overturned an earlier decision by the First-tier Tribunal (FTT). The UT found that the FTT had applied an overly narrow legal testing in assessing whether the clinic’s treatments served a therapeutic purpose and lowered the threshold for how practitioners should document diagnosis.
In its decision, the UT stated, “This appeal concerns an important and difficult point. If a registered medical practitioner provides a treatment or intervention that has an aesthetic purpose or effect, under what circumstances might this supply fall within the exemption from VAT for medical care. We understand that this is a lead case with a number of cases stayed pending its outcome. It is also hoped that the decision in this appeal will provide guidance for other businesses in this sector.”
The ruling now provides a clear framework to help other aesthetic practitioners navigate VAT compliance. It confirms that a treatment may be exempt from VAT if it is administered by a registered healthcare professional, follows a multifactorial assessment, is supported by sufficiently evidenced clinical judgment and its principal purpose is determined to be therapeutic.
A company spokesperson from Azets, who were the instructing accountants on this case, commented, “This decision has removed a great deal of the previous uncertainty around the definition of medical care, which will help a large number of businesses in dealing with their VAT Accounting”.
The case has been remitted to the FTT for reconsideration in line with the UT’s guidance, with His Majesty’s Revenue and Customs (HMRC) having 30 days to apply for permission to appeal the decision.