Cosmetic surgery providers to be chased for unpaid VAT

Law firm Pinsent Masons believes many people who have been providing procedures such as botox, dermal fillers and hair transplants think the services they are providing are VAT free because of their medical purposes.

However, many that are providing this sort of service are providing it primarily for aesthetic purposes which in the eyes of HMRC should be subject to VAT.

Recently HMRC targeted a London based hair transplant provider who argued his services were used by patients after receiving chemotherapy, but not all of his services were for that which led the First Tier Tribunal (FTT) to say an agreement would need to be made between HMRC and the surgeon on how much he owed. This stretched back over a 17 year period.

Bryn Reynolds, partner at Pinsent masons says that many providers of cosmetic surgeries will ‘need to urgently review their position’ as they have gone along running their businesses for years believing they were exempt from VAT.

In just the last two years there have been six cases go to the FTT which Reynolds says could be ‘just the tip of the iceberg’ as HMRC are starting to investigate cosmetic surgery providers and aesthetic providers.

Reynolds added that the sector could yield a high return for HMRC as it has grown significantly in recent years.

Reynolds said: ‘Business owners may have taken advice in the past that their services are not VATable, but as the landscape and the services being offered have moved on, they need to revisit their conclusions to ensure that the advice remains sound.’

‘Some have argued that because the procedures are undertaken by doctors or other medical staff then they should qualify for the VAT exemption but HMRC see the medical VAT exemption as being for the treatment or diagnosis of diseases.’

Source - Business & Accountancy Daily

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