The judgment in the recent tribunal case Illuminate Skin Clinics Ltd (ISC) highlights the battleground on which HMRC and a significant number of ‘healthcare providers’ have locked horns in recent years.
The prize at stake is the VAT exemption found within Group 7 of Schedule 9 of the VAT Act “Health and Welfare”. Many businesses operating at the periphery of the health sector claim that the services they offer are exempt from VAT. They include businesses offering services such as cosmetic treatments – botox injections, cosmetic surgery (Ultralase Aesthetics Ltd, Skin Rich Ltd); 4D baby scan services (Window to the Womb); the provision by medical professionals of expert witness services (d’Ambrumenil); & supplies of medical staff through agencies (Medacy Ltd , Rapid Sequence Ltd).
In the instant case, ISC offered a range of ‘aesthetic, skincare and wellness treatments including ‘fat freezing, thread lifts, chemical peels, fillers, facials, intravenous drips and boosters.’ ISC is the trading style of one Dr Sophie Shotter a registered member of the GMC practicing as an ‘aesthetics doctor’. ISC claimed that its services were within item 1 of Gp 7. That is that they were [exempt] “services consisting in the provision of medical care by a person registered or enrolled in the register of medical practitioners”.
It was clear that Dr Shotter met the medical practitioners registration criterion. As in so many of these cases, however, the critical determinant was whether the services Dr Shotter provided under the ISC brand amounted to “medical care”. During the period at issue ISC treated the following as VAT exempt medical services – Botox, Dermal fillers, CoolSculpting, Microsclerotherapy (for thread veins on the body), Prescription skincare, Chemical peels, Microdermabrasion, Thread lifting, Thermavein (for facial thread veins and removal of skintags etc), Aqualyx & Platelet-rich plasma treatment.
Typically people attending ISC’s premises would receive an assessment / consultation with Dr Shotter. This would allow persons time to decide whether they wished to proceed with a specific course of treatment. If they did the necessary appointments would be made.
The Tribunal reiterated many of the themes from similar appeals, most significantly that the exemption for medical services must be construed narrowly. Following the definitions used in the Mainpay judgment ([2022] EWCA Civ 1620), it held that the term “medical care” meant the “diagnosing, treating and, in so far as possible, curing diseases or health disorders” and concluded that the services should ultimately have a therapeutic aim.
Ultimately, the Tribunal decided that ISC’s services did not fit within the definition of medical care and would dismiss the appeal.
This is an area which is increasingly litigated. Many high street beauty salons now offer these services as standard and whilst there have been some interesting judgments, the only real guarantee of achieving the exemption is to ensure that the primary purpose of the service is the protection, maintenance or restoration of the health of the person concerned.
