VAT on Botox Treatments

VAT on Botox Treatments

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My client is a registered nurse (thus qualified healthcare professional) who runs her own skin clinic (providing laser treatments, fillers, skin care treatments, botox). She has recently queried whether some of the botox treatments could be tax exempt, particularly when it is done for the primary purpose of 'medical' rather than purely for 'cosmetic' reasons.  She has heard that this is the norm in certain areas and I understand that other businesses have in the past requested clients complee a form stating that the treatment is for psychological reasons thus making it exempt.  (see previous posts on the subject a few years ago)

A previous accountant has suggested it would be best to keep the medical treatments such as this into a separate company and thus make the new company tax exempt. I would appreciate your views. If it was clearly vat exempt on medical grounds, wouldn't she be able in anycase to treat it as such in her existing limited company.

I would be interested to know your views on this as I know it is a grey area.  Does anyone out there have any clients doing the same treatments and how are you treating it?  I also understand there might be a test case going through on this at the moment.  If anyone knows the details of this it would be really appreciated.

 
 

My client provides botox and fillers to her customers, which are administered by doctors. I am having difficulty finding out if the treatments are exempt from VAT, and would be interested to know how other people with the same situation are treating it. The Vat booklet states that if the procedure is carried out as an element of health care treatment, it is exempt, but vatable if purely for cosmetic reasons. My client gets her customers to fill in a form stating that the treatment is for phycological reasons and says that this is normal for the industry and is all that is needed to make the treatment exempt. I have my doubt but would be interested if anyone out there has clients doing the same treatments and how they are treating it.

Replies (15)

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Euan's picture
By Euan MacLennan
25th Sep 2013 13:54

Botox is a toxin

Some quotes from Wikipedia:

A Botox injection, consisting of a small dose of botulinum toxin, can be used to prevent development of wrinkles by paralysing facial muscles.Botulinum toxin can cause botulism, a serious and life-threatening illness in humans and animals.It is the most acutely toxic substance known.

How could a Botox injection be given for medical reasons?

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Replying to BigBadWolf:
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By jizzlebizzle
16th Oct 2014 08:48

hypohydrosis is a condition

Hi Euan - I know this thread is a little old but I was trawling through accountingweb.

Hypohydrosis is excess sweating (normally in hands and feet) and botox can be used to block the secretion of sweat from overactive glands. This would have no trouble being diagnosed as medical treatment and would not be cosmetic.

I would normally consider the manner in which a treatment is used for the VAT purposes not necessarily the treatment itself. This is because there are some treatments that botox is used for which would be standard rated due to the cosmetic nature of the treatment.

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By Steve Kesby
25th Sep 2013 13:59

@Euan

Don't doctors go prescribing nicotine patches and the like to tose afflicted with weak wills. I think that's now a recognised medical treatment and nicotine's a deadly poison.

Edit: Not sure if the word deadly is superfluous there.

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Euan's picture
By Euan MacLennan
25th Sep 2013 14:13

Mmmm ...

Doctors are paid by the NHS and out of an altruistic belief in the common good, they prescribe anti-smoking treatments so that patients won't get illnesses later in life that cost the NHS (and us) a lot of money to treat.

Also, Nicotine is nowhere near as poisonous as Botox.

Also, if it is prescribed by a doctor, it is, almost by definition, a medical treatment.  I can see a distinction from a nurse running "her own skin clinic (providing laser treatments, fillers, skin care treatments, botox)."

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By shaun king
25th Sep 2013 14:25

Cosmetic surgery

Working with a large independent hospital who undertakes cosmetic surgery in many forms, to establish the VAT liability you have to consider whether the work is for therapeutic purposes. There has been a recent ECJ decision on a Swedish case where the court found that the concept of "therapeutic purpose" is not to be strictly interpreted, and that there may be an underlying psychological reason for health problems to be corrected by the surgery.

It follows if there is a psychological reason then the supply can be exempt. A good example can be breast enhancements. Some women come in off the street and want an enhancement and that is taxable and some women are referred by the GP because of low self esteem etc and that is psychological and can be exempted.

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Replying to Chris.Mann:
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By anna_c
09th Sep 2014 14:48

Gender dysmorphia

Given the medical evidence supporting the medical necessity of surgery to align body with mind for transgendered or intersex conditions, and the legal allowances to change all official documents including birth certificate, a clearer example might be all reasonable surgical procedures required to permit an individual to function in society and be recognised in their gender.  This would have to include facial surgery, not just genitals and [***].  Would you agree?

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By JamesL
25th Sep 2013 14:29

If I buy a spanking new trendy shirt and go out on a Saturday night feeling a million dollars (which I frequently do!!!) is this a psychological purchase?

 

 

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By chippyberg
25th Sep 2013 14:32

Agree with Euan

Completely agree with Euan.  Wrinkles are a fact of life aren't they...?! ;)

HOWEVER there is the case that botox is used to reduce the symptoms of hyperhidrosis (excessive sweating), but again, agree with Euan that the clinic seems more of a cosmetic enterprise.

 

 

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chips_at_mattersey
By Les Howard
26th Sep 2013 08:27

Grey area - medical treatment?

I am inclined to agree that botox (and other cosmetic processes) fall short of medical treatment. However, it is possible that it is part of the treatment of a medical condition (PN 701/57, para 4.4). Do note that exemption also depends on delivery by a medical professional (PN 701.57, para 2.1).

And, I advise not splitting the business into a taxable and an exempt business. This is artificial splitting, and can be challenged by HMRC. If there is genuine exempt income, then you will have to do the Partial Exemption calculation.

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By Kingswear Court
26th Sep 2013 09:15

As an Ex VAT Inspector...

It is some years ago now but the principles remain.

If in doubt, get a ruling in writing from the VAT department mentioned in the public notice that people have been quoting.

It seems to me, to depend on 'What is a Medical Treatment'. The hippocratic oath is "First do no harm" so as pointed out before, this is a treatment using potentially dangerous poisons. Having said that, all administered drugs can be given in lethal doses and I am not aware of anyone dying from Botox injections.

If I were doing a VAT visit to establish correct tax liability, I would argue that as a 'medical' treatment exempt from VAT you would need an external verification from a Consultant Psychologist to say that this person's life is 'at risk' without medical intervention. Otherwise, with no external, 'high-value' proof, this is a chosen treatment for whatever reason (cosmetic or pseudo-medical) and is chargeable with VAT at standard rate.

A nurse is a medical professional but it is a risky strategy for someone to get a client to sign a VAT disclaimer without a ruling from the VAT office. This business could find itself paying out a lot of money in VAT on past income plus consequent penalties for 'The right tax at the right time".

Splitting the business will, quite rightly, raise questions as to tax avoidance. It involves more accounting; expense and leads to more 'questioning' by the VAT office, possibly leading to more visits - definitely to be avoided!

The Partial Exemption scheme (in my experience, unless done by a competent accountant with good VAT knowledge) often led to 'mistakes' which can prove costly, too.

These treatments are not cheap and if the person is truly 'forced pyschologically' to go ahead, a 20% increase due to tax is not going to influence their decision. Beware the VAT Inspector using that argument against you in their ruling! If I were the business person, I would add VAT unless a patient is referred by a Psychologist willing to give the statement in their referral letter - "this person is at risk of taking their own life without treatment".

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chips_at_mattersey
By Les Howard
26th Sep 2013 09:16

Botox - exempt or taxable

Interesting how these discussions develop!

I am reluctant to seek a HMRC ruling. There are two reasons:

1. VAT is a self-assessing tax. There is comprehensive guidance available, as well as VAT professionals (like me!); and

2. HMRC rulings tend to be revenue-focussed, not law-focussed. Many I have seen simply provide the option that generates most VAT for the Treasury, even ignoring clear legislation and case law. But the taxpayer is left in a difficult position, as he has to either ignore the ruling or challenge it.

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By whazleyp
27th Sep 2013 12:38

Thanks for all your comments on this so far, they are greatly appreciated.

I understand that there is a test case going through the courts at the moment on this but have no reference to the details at all. If anyone can shed any light, that would be appreciated.

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By shaun king
27th Sep 2013 15:45

It was an ECJ case

Skatteverket v PCF Clinic AB, C-91/12 is the leading case on the liability of cosmetic surgery.

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By Septimus
06th Feb 2014 16:19

Toxic Poison !

There are a huge amount of toxic poisons given for health reasons -Warfarin = rat poison - Digoxin = a heart stopping toxin from the foxglove Etc Etc A situation where the treatment could be considered to be exempt if it is administered under a prescription written by a doctor, and administered by a health profession. 

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By nisha123
30th Mar 2016 06:22

As we all know these days people are very conscious about their health and beauty and they want to look beautiful and healthy. I think botox injection is very helpful for skin wrinkles and after reading this articles i got some good points regarding beauty and health. If you are looking for best health clinic where you can meet best psychiatry online so, this is the exact place for you.

 

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