In recent years Britain has experienced a boom in cosmetic surgery and procedures.  The old inhibitions on changing our appearance are receding and there is now a wide range of treatments available.  But how much is health care, which is exempt from VAT, and how much is really a beauty treatment, which is standard rated?

First let’s look at the basic VAT status of health care.

Medical care provided by professionals enrolled or registered on the relevant statutory register is exempt from VAT.  “Medical care” in this context means the protection, maintenance and restoration of the health of individuals.  A health professional who provides service other than medical care may be providing a service that is subject to VAT.

Medical care or treatment is also exempt if provided in a hospital, or a suitably registered or licensed hospice or nursing home, if it is provided in connection with the health of the beneficiary and in compliance with the registration or licence, if relevant.

Are cosmetic services health care?

HRMC’s view of cosmetic treatments is set out in VAT Notice 701/57 Health Professionals issued in January 2007.  They say that they “generally accept that cosmetic services are exempt if they are undertaken as an element of a health care treatment programme.  Where services are undertaken purely for cosmetic reasons, they will be standard rated.” Cosmetic dentistry has also been accepted as exempt as long it is provided as part of an overall health care plan.

There has been no further guidance on what is health care and what is “purely cosmetic”.  On a spectrum that goes from Botox injections and hair removal at one end to reconstructive plastic surgery at the other this can be a difficult decision to make.

Generally the health care profession has treated procedures that require surgery as exempt while minor treatments, such as Botox injections and hair removal using lasers, which can be administered by non-enrolled or non-registered persons, are often standard rated.

Where are we now?

HMRC are now suggesting that some cosmetic surgery is not carried out for health reasons and so should be standard rated.  At this stage they are not proposing to change the law or the Notice; they are seeking to draw a line between “health care” and “purely cosmetic” within the existing guidance.

The professionals who provide cosmetic surgery do not agree with where HMRC has suggested drawing this line and we can expect some lively debate on where it should be drawn.

If you are unsure whether your services are exempt or standard rated we can lead you through the current legislation and guidance.