VAT on Cosmetic Treatments

Cosmetic Treatments are VAT exempt medical services.. aren’t they?

by Berthold Bauer on October 13, 2023

A number of recent high profile VAT tribunal cases have been won by HMRC, who appear to be targeting clinics providing cosmetic procedures, and challenging those applying VAT exemption to these services. Businesses are urged to review the VAT treatment of impacted supplies and satisfy themselves that the VAT liability adopted doesn’t leave them at risk of challenge.


There have been a number of recent VAT disputes between taxpayers and HMRC which have gone to the First Tier Tribunal (FTT), specifically regarding the provision of cosmetic treatments, and whether these can be considered supplies of medical services, and therefore be exempt from VAT. For the most part, HMRC have been successful in these challenges, and the FTT judges have decided that a variety of cosmetic treatments cannot be considered medical services, as they do not have a therapeutic purpose, and are therefore taxable at the standard rate of 20%. It certainly seems as if HMRC have the industry in their sights again, which could cause trouble for organisations providing similar services to those challenged, or indeed those who are unsure whether the services they are providing are taxable or exempt.

Discovering a historic VAT liability where services have been treated as exempt from VAT when they should have been taxable can leave organisations at risk of a potentially sizeable VAT bill, as well as opening themselves up to potential penalties and interest charges from HMRC. In some cases, health care businesses may also find that this change in VAT treatment gives rise to an obligation to register for VAT, as the taxable turnover has exceeded the £85,000 threshold, which creates additional liabilities and responsibilities for your organisation.


Am I affected?

If your organisation provides cosmetic treatments, such as fillers, rhinoplasty, and liposuction, just to name a few examples, then it is vital that you consider whether they can be considered as ‘medical services’, in the context of the recent Tribunal decisions. For them to be considered medical services, there needs to be a degree of diagnosis and treating illness or disorders involved, and not just for cosmetic or aesthetic purposes.

In a recent case with Epem Ltd, the FFT determined that a number of their services should actually be taxable, as opposed to exempt medical services. Epem provided treatments such as varicose vein treatments, laser treatments and minor surgical procedures such as fillers, and the removal of scars and lesions.

Epem argued that the services they were providing were for the protection, maintenance or restoration of the health of the individuals, and that these services were being performed by qualified and trained professionals in a medical centre. It was noted that Epem is not registered with the Care Quality Commission, and it is not a state regulated institution or hospital, and the Tribunal drew the conclusion that its services could not be exempted under Item 4 Schedule 9, Group 7 VATA, which exempts the ‘provision of care or medical or surgical treatment’ in any hospital or state regulated institution. This meant that the only other possible route to exempt their services was via Article 132(1) of the VAT Directive, which provides the exemption of certain medical services.

The FTT however identified a number of instances which indicated the services were cosmetic in nature. The following factors were determinative when concluding the VAT liability of the treatments:

  • Epem’s marketing targeted the ‘medico beauty’ industry, as opposed to the healthcare industry.
  • The FTT found that ‘dissatisfaction with appearance does not automatically mean that the patient has a health disorder’.
  • Whether a treatment is therapeutic in nature is a medical assessment which is determined by a qualified person based on their medical findings – Epem were not carrying out any kind of medical assessments.
  • Epem failed to present any evidence to support their argument that the services amounted to ‘medical care’.

This case with Epem follows another recent case where the FFT again favoured HMRCs decision that llluminate Skin Clinics Ltd were not providing exempt medical services, and were in fact providing taxable cosmetic services. Again, their decision came down to a lack of diagnosis of illness or disorder, a lack of referral from a healthcare professional, no treatment plan etc. The FFT summarised that if the services are not diagnosing, treating or curing an illness or disorder, they cannot be considered exempt medical services.

VAT exempt Medical Services


What do I need to do?

These cases are a concern to businesses operating in this sector, especially those which have been treating the supply of cosmetic services as exempt. We would recommend re-visiting and reviewing the VAT treatment immediately. HMRC are very active in the medical industry and appear to be challenging those who have been treating their services as exempt, so it is vital that you get clarity on the VAT liabilities of the services you are providing, and understand the risk of continuing to adopt that treatment in light of these cases.


How can BBVAT help?

We can undertake a review of your services and provide a view as to whether the business is at risk of challenge from HMRC. Our VAT health checks are popular with health care businesses that want to ensure that the VAT treatment adopted reflects HMRC’s current thinking and whether VAT savings can be made or there is opportunity to adopt a more favourable VAT treatment on supplies.


Have you used our Free VAT helpline?

Our VAT helpline is completely free. The helpline provides for 30 minutes of technical support and advice on any VAT issue, and including email or call and follow up response for your file. If you have a query or would like our help, you can call us on 01732 868266, email us at, or submit an enquiry on our website here.

Berthold BauerCosmetic Treatments are VAT exempt medical services.. aren’t they?

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