Illuminate Skin Clinics Ltd v The Commissioners for HMRC
[2023] UKFTT 547 (TC)
Aesthetic-Doctor.Com Ltd v The Commissioners for HMRC
12 December 2023
[2024] UKFTT 48 (TC)
First-tier Tribunal
A cosmetic clinic argued it shouldn't pay VAT because its treatments helped patients' mental health. The judge disagreed, saying the main reason people went there was to look better, not to get medical treatment. The clinic's records weren't detailed enough to prove otherwise, so they have to pay the VAT.
Key Facts
- •Aesthetic-Doctor.com Ltd (the Clinic) appealed HMRC's decision to register the Clinic for VAT from June 1, 2010, due to exceeding the VAT threshold.
- •The Clinic provides a wide range of cosmetic treatments.
- •HMRC argued the services were standard-rated, purely cosmetic, even if ancillary therapeutic purposes existed.
- •The Clinic argued it was partially exempt, with cosmetic procedures below the VAT registration threshold.
- •The sole witness was Dr. McKeown, whose evidence was criticized for straying into opinion and advocacy.
- •The Tribunal considered the purpose of the services, the meaning of 'purely cosmetic reasons', the significance of using medical skills, and whether HMRC could exclude cosmetic services from exemption.
Legal Principles
The purpose (or principal purpose if multiple purposes exist) of the service determines VAT exemption under Article 132(1)(c) of the Principal VAT Directive 2006/112/EC.
Principal VAT Directive 2006/112/EC, Article 132(1)(c); Value Added Tax Act 1994, Schedule 9, Item 1; Mainpay Ltd v HMRC [2022] EWCA Civ 1620; CIG Pannónia Életbiztosító Nyrt v Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága C-458/21
'Purely cosmetic reasons', as established in Skatteverket v PFC Clinic AB Case C-91/012, applies to all cosmetic treatments, not just plastic surgery.
Skatteverket v PFC Clinic AB Case C-91/012
Medical care exemptions are autonomous concepts of EU law and must be interpreted strictly (but not restrictively).
Kügler C-141/00; Mainpay Ltd v HMRC [2022] EWCA Civ 1620
The exemption applies only if the purpose of the service is to diagnose, treat, and cure diseases or health disorders, or protect, maintain, or restore health.
Mainpay Ltd v HMRC [2022] EWCA Civ 1620; W v D C-384/98
Outcomes
Appeal dismissed.
The Clinic failed to prove its services constituted medical care with a therapeutic purpose. The evidence, including patient records, lacked sufficient detail and consistency to demonstrate diagnosis, treatment, or cure of health disorders. The principal purpose of the services was cosmetic improvement, not the treatment of health disorders.
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