Clinic's Cosmetic Procedures Do Not Qualify for VAT Exemption Under Medical Care - Aesthetic-Doctor.Com Ltd v The Commissioners for HMRC Case Analysis

Citation: [2024] UKFTT 48 (TC)
Judgment on

Introduction

The case of Aesthetic-Doctor.Com Ltd v The Commissioners for HMRC, presided over by Tribunal Judge Anne Scott, concerns the liability for VAT registration of a private medical clinic, referred to as the Clinic, involved in providing aesthetic medical services. Central to the issue is whether these services fall under the exemption for medical care as outlined in Article 132(1)(c) of the Council Directive 2006/112/EC and implemented in Item 1 Group 7 Schedule 9 of the Value Added Tax Act 1994 (VATA). The case delves into interpretations of ‘medical care’ and explores the distinction between services that are medically necessary versus those that are purely cosmetic.

Key Facts

The Clinic, directed by Dr. Darren McKeown, offered cosmetic treatments which HMRC determined were subject to VAT as they exceeded the threshold. Dr McKeown appealed against this decision, claiming that the treatments, while cosmetic in nature, had a medical purpose as they addressed patients’ psychological concerns. The Clinic had grown and involved practitioners providing a range of non-surgical and surgical cosmetic procedures. The nature of record-keeping and how health disorders are documented by the Clinic were central to the appeal, particularly in whether treatments had psychological benefits that would constitute medical care under VATA.

The legal principles revolved around the interpretation of ‘medical care’ for VAT exemption purposes. The tribunal examined several core issues, including:

  1. The distinction between ‘the principal purpose’ and ‘the purpose’: The judgement referenced existing case law to determine if the primary aim of the Clinic’s services was medical care.
  2. The application of the ‘purely cosmetic’ principle from PFC Clinic AB: It debated whether this principle applied solely to plastic surgery or all cosmetic treatments.
  3. The significance of the service provider’s qualifications: The decision considered whether a practitioner’s qualifications influenced whether a service could be regarded as ‘medical care’.
  4. Alleged ‘administrative fiat’ by HMRC: The Clinic argued that HMRC’s expectations for record-keeping effectively imposed conditions not specified in the legislation, breaching the principle of fiscal neutrality.

The tribunal referenced decisions such as Mainpay, Kügler, PFC, and Solleveld to understand the scope and boundaries of medical care exemptions.

Outcomes

The Tribunal dismissed the appeal, upholding HMRC’s assessment that the Clinic should have been registered for VAT and its supplies should have been standard rated. It concluded that the predominant purpose of the Clinic’s services was cosmetic, not medical care. The services did not fall under the medical care exemption despite some addressing psychological health concerns. The Tribunal emphasized the lack of documented medical necessity and psychological diagnoses in the Clinic’s patient records.

Conclusion

Tribunal Judge Anne Scott’s meticulous analysis underscores the complexity involved in delineating medical care within the realm of aesthetic medicine for VAT exemption purposes. The decision highlights the necessity for comprehensive and detailed record-keeping to establish the medical intention behind cosmetic procedures. It serves as a significant reference for medical professionals providing similar services, emphasizing the importance of clear, documented evidence of medical necessity to qualify for VAT exemptions under UK law. The case reinforces the stringent criteria that must be met to claim the medical care exemption and dismisses the notion that HMRC’s examination of VAT liabilities constitutes an impermissible legislative act.

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