Illuminate Skin Clinics Ltd v The Commissioners for HMRC
[2023] UKFTT 547 (TC)
Vision Dispensing Limited v The Commissioners for HMRC
21 November 2023
[2023] UKFTT 991 (TC)
First-tier Tribunal
A company selling contact lenses online argued its services were exempt from VAT as "medical care." The court disagreed, saying the company's help line and website information, while sometimes offering medical advice, didn't qualify as providing enough medical care to be exempt from tax. The court also said the company's staff weren't sufficiently supervised by qualified professionals.
Key Facts
- •Vision Dispensing Limited (VDL) supplies services linked to the online sale of prescription contact lenses.
- •VDL argued that its services are exempt from VAT under Item 1(b) of Group 7 of Schedule 9 to the Value Added Tax Act 1994 (VATA) as medical care.
- •HMRC argued that VDL's services are standard-rated.
- •VDL operates a warehouse and customer service functions, while Vision Direct BV (VDBV), a Dutch company, handles the online sales of contact lenses.
- •Customers enter separate contracts with VDBV for lenses and VDL for dispensing services.
- •VDL's services include answering customer queries (including clinical ones), sending reminders to buy lenses, and managing the warehouse.
- •The Vision Direct website contains significant clinical information.
Legal Principles
Exemptions from VAT are to be strictly construed.
VATA and CJEU case law (Kügler)
For services to qualify as "medical care," they must have as their purpose the diagnosis, treatment, and cure of diseases or health disorders.
CJEU case law (Christoph-Dornier)
Services forming an essential, inherent, and inseparable part of an overall process of medical care can amount to medical care.
CJEU case law (Verigen)
The principle of fiscal neutrality requires that similar supplies of services in competition be treated the same for VAT purposes.
CJEU case law (Rank Group Plc v. HMRC)
"Direct supervision" in the context of VAT does not require constant oversight but involves appropriate levels of supervision depending on the circumstances and risk.
UK VAT Tribunal case law (Elder Home Care, Land, Moss, Allergycare)
Outcomes
Appeal dismissed.
VDL's services did not constitute "medical care" under VATA, and those services were not wholly performed or directly supervised by appropriately qualified individuals.