The Upper Tribunal (Tax and Chancery Chamber) has recently issued an important decision providing clarification on the VAT liability of medically registered non-surgical aesthetic practitioners. The ruling reviews and overturns a previous judgment from the First-tier Tribunal (FTT) and offers vital guidance on when aesthetic treatments may qualify for VAT exemption as medical care.

 

The full judgment is available here:
Illuminate Skin Care v HMRC – Decision Final.pdf

 

Background

This case concerned whether certain aesthetic treatments provided by medically registered practitioners could be treated as VAT-exempt supplies of medical care. The Upper Tribunal reviewed the earlier FTT findings and determined that the case should be reconsidered. In doing so, it identified several areas where the original tribunal’s analysis required greater clarity and depth.

Key Findings and Guidance

In sending the case back to the FTT, the Upper Tribunal made a number of significant comments that will influence future assessments of VAT liability for aesthetic and cosmetic treatments.

Principal purpose of the treatment
The key issue is whether the main objective of a treatment is therapeutic (medical) or cosmetic in nature.

Therapeutic versus cosmetic purpose
Treatments provided to address a diagnosed medical or psychological condition may qualify as medical care, whereas those carried out purely for aesthetic enhancement generally will not.

Importance of diagnosis
A clear, evidence-based diagnosis is essential to establish that a treatment has a therapeutic purpose.

Burden of proof for psychological conditions
Where the claimed therapeutic basis is psychological rather than physical, the practitioner must be able to provide credible clinical evidence of diagnosis and need.

Who carries out the procedure
VAT exemption applies only when the treatment is delivered by a medically registered professional acting within the scope of their registration.

Depth and quality of diagnosis
A thorough, documented diagnostic process is expected where VAT exemption is claimed on medical grounds.

Multi-factorial analysis
The Tribunal emphasised that determining the principal purpose of a treatment requires a holistic assessment, considering all relevant clinical, procedural and contextual factors.

Therapeutic versus cosmetic purpose
Treatments provided to address a diagnosed medical or psychological condition may qualify as medical care, whereas those carried out purely for aesthetic enhancement generally will not. Where the purpose may be both therapeutic and cosmetic, the provider must identify the principal purpose.

Tribunal’s Conclusion

The Tribunal stated:

“For the reasons given above we allow the appeal on Ground 3, set aside the Decision and remit the appeal to the FTT to reconsider its decision in the light of our findings.

We hope that the guidance provided by this Decision will be of assistance in cases which are presently stayed and generally in determining whether supplies of cosmetic treatments fall to be treated as exempt supplies of medical care. The supply must be made by a registered person and must have a therapeutic purpose as we describe at [104] above. Where a supply has both a therapeutic purpose and a cosmetic purpose it is necessary to identify the principal purpose. That will be a multi-factorial analysis which is likely to include consideration of the factors described at [105] above.”

The Tribunal also referred strongly to relevant European Court judgments, confirming the continuing influence of EU case law in determining the scope of VAT exemptions for medical services.

Next Steps and Sector Implications

The case has now been referred back to the original FTT for reconsideration in light of the Upper Tribunal’s findings. The Joint Council for Cosmetic Practitioners (JCCP) has confirmed that it will monitor developments closely, as the outcome is likely to have significant implications for VAT treatment across the aesthetic and cosmetic medical sectors.

Summary

This judgment provides valuable clarification for practitioners, clinics and advisers working within non-surgical aesthetic medicine. It reinforces the need for:

• Clear and clinically justified diagnoses
• Documented evidence of therapeutic purpose
• Consideration of the practitioner’s registration and professional status
• A balanced, multi-factorial assessment of treatment purpose

The decision confirms that VAT exemption can only apply where the principal purpose of the treatment is therapeutic, rather than cosmetic.