Weekly VAT News

Illuminate Skin Clinics Limited: VAT exemption for medical care – UT

In June 2023, the First-tier Tribunal ruled that the VAT exemption for the provision of medical care by a registered medical practitioner did not apply to the aesthetic, skincare, and wellness treatments provided by Illuminate Skin Clinics Limited. Illuminate was granted leave to appeal the FTT decision, and the Upper Tribunal has set aside the FTT decision, and remitted the case to the FTT. The UT had granted Illuminate permission to appeal on four grounds. The UT considered that the FTT did not make errors of law in relation to grounds 1 and 2 (regarding whether Illuminate’s services were the provision of medical care) and ground 4 (regarding the implementation of the EU Principal VAT Directive). However, the UT considered that the FTT confined its assessment of the therapeutic purpose of Illuminate’s care too narrowly, which was contrary to case law (ground 3). In particular, although diagnosis would usually be necessary to establish a therapeutic purpose, “the FTT’s expectations as to how a diagnosis might be evidenced were too high and over-generalised”. Accordingly, the UT allowed the appeal on ground 3 and, as the UT was not in a position to remake the decision, remitted the appeal to the FTT. The UT also expressed hope that its guidance would assist the cases stayed pending this case’s outcome, and more generally in determining whether the medical care exemption applies to supplies of cosmetic treatments. In summary: the supply must be made by a registered person and have a therapeutic purpose, where a supply has both a therapeutic purpose and a cosmetic purpose it is necessary to identify the principal purpose, and that will be a multi-factorial analysis. (Contact: Phil Simmons)

Lands Luo Limited: Application for late appeal – FTT

The First-tier Tribunal has considered an application to make a late appeal. Unusually, the tribunal included Lord Justice Dingemans, Senior President of Tribunals, in addition to the tribunal judge and tribunal member. Lands Luo Limited (LL) applied for permission to make a late appeal to the FTT against an HMRC decision to deny repayment of an input tax claim. The FTT considered whether LL had made an application to appeal in time, and concluded that the documents LL provided or purported to provide to HMRC did not constitute a request to appeal. Accordingly, LL needed permission to bring a late appeal. The FTT noted that it had a duty to apply the Upper Tribunal’s guidance on the law, but that the UT had set out different approaches to this issue in its decisions in Martland and Medpro Healthcare Limited. The FTT doubted that the different approaches would lead to different results in many cases. The three-stage test for determining whether to grant permission is common ground between the two decisions, but Martland set out a stricter approach. The FTT considered it should apply Martland, as the approach is consistent with the Court of Appeal’s approach in BPP Holdings Limited, which was affirmed, or permitted, by the Supreme Court. On that basis, the FTT concluded that LL should be permitted to appeal out of time. The FTT then cross-checked the decision against the Medpro test, and confirmed that the conclusion would have been the same. The UT also recently considered the two approaches in Tajinder Pawar, concluding that it should follow Medpro as it was the more recent decision. The UT in Pawar noted that HMRC were considering whether to apply for permission to appeal Medpro, and the issue may therefore be resolved at a higher court. (Contact: Rob Holland)

Correcting VAT errors – HMRC guidance

In September 2025, HMRC updated its guidance Check how to tell HMRC about VAT Return errors, as form VAT652 can no longer be used to correct errors in VAT returns. This means that the online error correction form must now be used, using the Government Gateway, with HMRC viewing the online system as being a means of improving efficiency and accuracy. We understand that HMRC are currently prepared to accept manual notifications. The ICAEW has reported on this development, providing some further context. (Contact: Andrew Clarke)

CJEU VAT case calendar

On 23 October, the CJEU will deliver its judgments in Zlakov on the application of VAT on costs for pro bono legal work, Kosmiro on debt factoring, and Brose Prievidza on an EU VAT refund claim for tooling. There will be Advocate General opinions on 22 October in Digipolis on services supplied by a joint venture, and on 23 October in Randstad España on the deductibility of entertainment expenditure and the application of the standstill clause.

Dbriefs webcast

Today, Monday 20 October, at 12.00 (and then available on demand), there will be a Global trade update webcast. Our panel will discuss the latest developments in global trade and their impact, how companies are adapting to higher US tariffs, and the implications for tax and transfer pricing strategies.