It is always worth remembering that VAT works on a ‘guilty until proved innocent’ basis. Knowing that a VAT exemption applies to health services does not mean that exemption necessarily extends to all services that someone might think of as being medical. The fact that treatment involves lasers, knives or needles or that it is delivered by someone with a medical qualification, doesn’t mean that it is a medical service within the scope of the VAT exemption. The big question should always be is it UK VAT Exempt Health or VATable Beauty?
An optimistic view of the ‘width’ of any VAT relief will always lead to trouble in the end.
It follows that before applying any VAT relief it is vital to make sure that the supply in question falls squarely within the terms of the relief as laid out in VAT law. The consistent line taken in VAT appeals right through the appeal process is that the terms of every VAT exemption have to be ‘narrowly construed’. This means that the relief does not have porous walls. To be similar to something that is VAT exempt will not be enough.
To qualify for a VAT relief the supply needs to fit the characteristics of the relief and no amount of wishful thinking will ever change that.
A recent case decided by the First Tier Tribunal (FTT) found against the argument raised by Skin Rich Limited (2019 TC 07310) that various specialist skin treatments should be treated as being VAT exempt. Some of the treatments in question were delivered by medical professionals, which is one of the tests laid down in VAT law. However what Skin Rich did not take into account was the over-arching requirement that the service needs to also be of ‘medical care’.
In order to be within the medical care category, the principal purpose of delivering the care has to be the protection, maintenance or restoration of health. The FTT had to decide whether the supply was UK VAT exempt health or VATable beauty? It was not satisfied that this test was met by Skin Rich Limited and therefore decided that VAT correctly fell due on all associated supplies.
None of the lines between any of the VAT reliefs are terribly clear-cut. Please never assume that a relief applies without carefully and objectively checking out the extent of the relief by reference to the wording of the law. we will always be happy to help so why not get in touch?