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£500m ‘Boob Tax’ | HMRC adding VAT to cosmetic surgery

By December 12, 2014November 28th, 2017No Comments

Up to now VAT has only been chargeable on small scale cosmetic procedures; current VAT inclusions include Botox injections and other non evasive procedures available on the high street.


Cosmetic surgery procedures that will be affected by HMRC’s new VAT plans include liposuction, breast augmentation, rhinoplasty, tummy tucks and other invasive procedures.


Nicknamed ‘boob tax’ by the cosmetic surgery industry, if the Revenues VAT plans go ahead then cosmetic surgery prices can expect to rise by a significant 20 percent; an additional £1,000 to the current cost of a boob job.


Thought to be worth a booming £2.3b per year, HMRC have denied they are targeting cosmetic surgery due to the industry’s growing success.


David Gauke, Treasury Minister, has addressed concerned MPs and defended the government’s new move towards the cosmetic VAT.


To get the cosmetic VAT plan started HM Revenue and Customs (HMRC) have drawn up provisional guidelines and sent them out to plastic surgeons throughout the UK.


HMRC’s cosmetic VAT plans will make it compulsory for doctors performing cosmetic surgery procedures to register for Value-added-tax (VAT) and add the cost of the tax onto the patient’s price plan.


The only patients who will not be charged the additional VAT will include those under cosmetic consultation for ‘therapeutic’ reasons and referral for a medical condition or disfigurement – for example body dysmorphic disorder –  that is being corrected through a cosmetic procedure.


HMRC’s cosmetic VAT proposal says that any cosmetic procedure which has ‘the aim of protecting, maintaining or restoring the health of an individual’ will be exempt from additional VAT.


President of the British Association of Aesthetic Plastic Surgeons (BAAPS), Fazel Fatah, said:


“The subjective proposals being put forward by HMRC will potentially harm a large number of patients.


“They imply that, by definition, any procedure that corrects appearance rather than function is not a medical need. There has been no meaningful discussion with the professional bodies involved.


“We can only hope that common ground can be found that protects the wellbeing of patients while balancing the obvious need to increase tax revenues. With surgery, we are dealing with human lives.”


So, is this another tactic from HMRC to decrease the tax deficit and pay off debt?


Many have argued that additional VAT on cosmetic surgery and increased costs will send many Brits abroad to get the work done, leaving the NHS with more botched jobs to put right.


HMRC are putting a firm foot forward as to who will be liable for exemption from the proposed cosmetic VAT:


“Cosmetic services are usually performed so that the individual concerned may feel better about their appearance.


“The mere fact that a cosmetic treatment may make a person feel more confident about their appearance is not in itself sufficient to make the treatment exempt.”


HMRC’s stern stance on the proposed cosmetic VAT may come from recent criticism on the uncertainty of HMRC IR20 guidelines, brought to light in the Supreme Court judging of Robert Cooper-Gaines residency case.


The former president of BAAPS, Douglas McGeorge, said:


“Everyone is in uproar about this. The amount of money HMRC will make out of this is astonishing. If it is backdated, the Government could easily bankrupt some surgeons.


“But for patients it will also create ethical problems.”


McGeorge puts the point across that it would be hard to set out a distinct guideline of who and who doesn’t qualify for the VAT as every patients procedures are different.


“What level of asymmetry or abnormality is required to justify breast surgery? When do large breasts create enough of a physical problem to allow treatment,” he added.


“Our role is to make sure patients needs justify treatment. Any justification to HMRC of our decisions on VAT will be impossible unless patient confidentiality is breached.”


Based on current HMRC guidance, accountants have been advising plastic surgeon clients that they are exempt and do not need to register for VAT.


Although, HMRC are claiming that they are not setting new legislation but instead clarifying their position on VAT and cosmetic surgery, which has been in place since 2007.


A spokesman for HMRC said that since 2007 cosmetic surgery has been liable for VAT but ‘each individual case was needed to be considered on its individual merits’.


Kevin Kinsella Jnr, of KinsellaTax, said:


“Oh dear, the poor darlings who have to have surgery to enhance various parts of the body are going to have to pay more for their surgery.


“I think the people who can afford cosmetic surgery can pay the extra, so I am not going to lose sleep at all.”


If you are under VAT investigation by HMRC then you need professional tax advice.


KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise Officers, fully experienced in HMRC investigations.