In the UK, value-added tax (VAT) is imposed on most goods and services provided by registered business, however, there are some exemptions. The lines can occasionally be blurred when it comes to what should or shouldn’t be taxed and medical care is one such area.
Here, Dua & Co’s team of accountants in Watford explain VAT in terms of cosmetic healthcare and how outsourcing your finance function to them can benefit you.
VAT and Medical Care
‘Medical care’ simply refers to providing protection and maintaining proper health of an individual as a registered professional. Professionals who are providing such medical care and fall under the appropriate guidelines set up by HMRC, are exempt from VAT. As these professionals are exempt from VAT, their patients are as well. This begs the question by professionals and patients alike as to what these guidelines include, what is exempt and what is not.
Is Cosmetic Healthcare Exempt?
One such branch of medical care, where the rules often cause confusion, is that of cosmetic healthcare. Some people may receive cosmetic treatments for aesthetic appearances, while others may do so for medical reasons. In the case of a rhinoplasty procedure, for instance, some patients have respiration problems and need the surgery to breathe properly. Others will choose to have the procedure for purely cosmetic and aesthetic reasons.
Cosmetic Healthcare VAT and HMRC Regulations
In January 2007, The HMRC released notice 707/507, which explained their position on cosmetic treatments. It provided guidelines stating that a cosmetic service should be exempt from VAT if it is part of a healthcare treatment programme. When the services given are solely for cosmetic purposes, then it will deductible as per standard rates. If the health care treatment programme includes any cosmetic dentistry then that service is also exempt.
Despite the explanation given in the HMRC note, some people were still unsure of their position. These guidelines simply stated that VAT was to be charged for things that were purely cosmetic and exempt for cosmetic surgeries related to health reasons, but did not explain the terms – this made it very difficult for professionals to decide how to categorise the treatments they were giving and distinguish whether or not to apply VAT.
New guidelines have now been released from HMRC that try and shed some light on the situation, and help draw a line between ‘health care’ and purely ‘cosmetic’ treatments and procedures. This clarification has caused some upset within the cosmetic surgery community, as to whether the line was drawn correctly or not.
How Outsourcing Your Finance Function Can Help
Instead of attempting to interpret where your services fall within medical care and whether or not they are exempt from VAT, outsource your finance function to Dua & Co’s highly skilled Finance Function team and let them complete your VAT returns and ensure that everything is filed correctly.
Not only will our Finance Function team take care of your VAT returns, they will also ensure that your company is fully compliant with all regulations, and that you meet all deadlines without penalties. The team covers everything from taking care of your company’s payroll and PAYE, managing accounts payable and receivable, monitoring cash flow and provides extensive bookkeeping services.
Dua & Co’s cost-effective finance function solutions could be the key to maximising your business’ success – email Himal at email@example.com to find out more.