Well, it looks like the taxman is now targeting bald people.
I knew I was getting old when, a few years ago, my daughter asked me “Daddy – why is the top of your hair nude?”. At that point, I might have considered a hair transplant, but the taxman’s doing his best to put me off because he’s making them 20% more expensive as the prices will now have to include VAT.
This follows a legal case and a tribunal over the past few weeks against a Harley Street Clinic that is going to have to pay £2.5million of VAT that HMRC says should have been charged on hair transplants over the past few years.
So, what’s behind this? Generally speaking, medical treatments are not subject to VAT. However, HMRC argued that hair transplants are not medical treatments – they’re purely cosmetic, which leads to 20% VAT being added to the price.
And this will be the same for many aesthetics clinics too – most of their treatments will be purely cosmetic.
The defence argued that, for many people, the transplant may be for mental health reasons. They also pointed out that bald people have fewer sexual partners and are less likely to get jobs. And, to try and get the tribunal on side, the defence pointed out that most of the men on the tribunal showed signs of baldness.
It didn’t work.
While HMRC accepted that some patients do have a medical need – e.g. following a cancer treatment or a psychological diagnosis – most are simply getting the transplant for cosmetic reasons.
So, a hair transplant will have VAT “on top”.
What this case shows again is that VAT is a complex matter. It follows other high profile cases over the years. Every accountant loves the Jaffa Cakes VAT case and, more recently, we’ve had court cases about spot-the-ball competitions and marshmallows.
But it just shows that it pays to consult an expert if you have any doubt about VAT.
If you have any questions, please email su*****@*********************co.uk or give us a ring on 0151 380 8084.
Many thanks
Jon