Aesthetics examines the landmark case victory that helped establish a VAT framework for aesthetic practitioners, providing legal clarity on when treatments may be exempt from VAT
Illuminate Skin Clinic has won a legal appeal at the Upper Tribunal (UT) regarding how VAT applies to aesthetic treatments – thus overturning an earlier decision by the First-tier Tribunal (FTT) from 2023.1,2 Until now, His Majesty’s Revenue and Customs (HMRC) has insisted that a diagnosis of an existing medical condition must be present for the treatment to be VAT exempt, as well as the treatment serving the purpose of treating that condition and being performed by a registered healthcare professional (HCP).3
A timeline of events
Illuminate Skin Clinic was founded by aesthetic practitioner of 13 years Dr Sophie Shotter. Dr Shotter shared that after deregistering from VAT in the last quarter of 2016, HMRC began querying the accounts of Illuminate Skin Clinic in 2017, and found that Dr Shotter should have been paying standard rate VAT.
In 2019 Dr Shotter appealed this decision on the grounds that the treatments provided were medical. However, in 2023, the FTT dismissed the appeal, concluding that the supplies do not constitute “medical care” and should have been standard rated. Dr Shotter, with the help of Monckton Chambers, who represented the appellant in this case, Veronica Donnelly, chartered VAT advisor for the international advisory group Azets, and Dr John Curran, chair of the British College of Aesthetic Medicine’s Regulatory, Ethics and Professional Standards Committee, as well as owner and medical director of Aesthetic Skin Clinic, appealed this decision. Dr Shotter says, “What I have fought over for the last nine years wasn’t because of the money but because I felt that if I accepted that everything I did was outside of the exemption, that I would be accepting that what we practice isn’t medicine, and that’s something I was not prepared to do.”
The landmark ruling
In October 2025, the UT concluded 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.1,2 The appeal confirms that any treatment may be exempt from VAT if it is administered by a registered HCP, is supported by sufficiently evidenced clinical judgment and its principal purpose is determined to be therapeutic.1,2
Donnelly explains that if a treatment is both therapeutic and cosmetic, it is necessary to identify the principal purpose which must be medical to be VAT exempt. This can be assessed through a multifactorial analysis which can include the patients’ desires, if the clinic is purely advertised as cosmetic online not medical, as well as what services the doctor provides.
“The definition of medical has widened,” Donnelly explains, “A HCP always needed a diagnosis of an existing condition for a treatment to be deemed medical but now they may also suspect a diagnosis, or demonstrate the treatment is for the purpose of preventing a specific future condition or disease.” This could include a risk of future carcinoma where there is evidence of skin damage such as moles, or blepharoplasty to prevent future sight impairment. Donnelly adds that a clinic does not need to be registered with the Care Quality Commission (CQC) to qualify for a VAT exemption; however, being registered may support the application and serve as an element of the multifactorial assessment. The practitioner must however, be listed with an appropriate regulatory body, such as the General Medical Council (GMC).
Dr Shotter explains that many first-tier tribunal judgments have previously gone against practitioners in similar cases. “True clarity,” she adds, “could only come from an upper-tier tribunal – one that rules on points of law rather than the facts of individual cases.”
Dr Curran who has been a lifelong advocate for patient safety and supported Dr Shotter, explains, “The VAT exemption is a matter of law and both the profession and HMRC are obliged to follow the legal rulings. This Upper Tier Court has helpfully set out the guidance for both HCPs and HMRC on how to assess what is exempt and what is non-exempt.”
How to ensure robust VAT practices
Donnelly reiterates that practitioners cannot take shortcuts in evidencing medical purpose, but the new guidelines clarify that they no longer need to provide excessive detailed documentation as HMRC previously advised. “You still need to provide details of what the condition or disease is or is suspected to be and why it is the main purpose of what you’re doing, as opposed to the cosmetic outcome,” she says, “as without that, it is still considered cosmetic.” Donnelly adds that the safest way to determine if a treatment provided in clinic may be VAT exempt is if it aligns with an existing or potential diagnosis.
Dr Curran echoes this, saying, “You will need to set out in your records why and how your patient presented, your findings and diagnosis where you are able to, the treatment offered and most importantly indicate the purpose of your management plan. In short, write proper medical style notes as a contemporaneous record of your practice and refer to the test set out in the judgement for a guidance on what is required to support your decision.”
Dr Shotter says, “I do think it’s a massive step forward, and it really strengthens the position of aesthetic and medically led clinics. It is not as simple as what HMRC have been trying to suggest, that all injectables are essentially cosmetic.”
Looking ahead
The new framework is now applicable across the UK. Anyone who feels that they may qualify for VAT exemptions under the new guidelines must review their VAT registration status and consider submitting a voluntary disclosure if eligible, which can be backdated up to four years.
It is also important to update future consultation templates to capture suspected or preventative diagnoses, and to identify any previous treatments that were historically standard rated for VAT but for which the clinical notes provide evidence of qualifying diagnoses. In addition, time should be taken to reassess the language used in future documentation to ensure it accurately reflects medical intent.
Dr Curran explains that to date, HMRC have not appealed the judgement of this court of record. This now becomes the guidance on the law which first tier tribunals, HMRC and HCPs must follow.
References
- HM Courts & Tribunals Service, and Upper Tribunal (Tax & Chancery Chamber). *Illuminate Skin Clinics Limited v HMRC [2025] UKUT 00341 (TCC), 13 October 2025. Decision (PDF). Available at: https://assets.publishing.service.gov.uk/media/68f8ac4980cf98c6e8ed8f61/Illuminate_Skin_care_v_HMRC_Decision_Final.pdf
- Monckton Chambers. Landmark VAT ruling on cosmetic services provided by registered healthcare professionals. 13 Oct 2025. Available at: https://www.monckton.com/landmark-vat-ruling-on-cosmetic-services-provided-by-registered-healthcare-professionals/
- HM Revenue & Customs. Health institutions supplies (VAT Notice 701/31). GOV.UK. Published 22 August 2014. Available at: https://www.gov.uk/guidance/vat-liability-of-health-institutions-supplies-notice-70131
- Donnelly, Veronica. VAT in Aesthetics: Essential Guide and Expert Insights. Hamilton Fraser. Available at: https://www.hamiltonfraser.co.uk/content-hub/vat-insights-with-veronica-donnelly