HMRC has set its sights on the cosmetic surgery and aesthetics sector, and the figures are eye-watering. It believes as much as £9.5bn in VAT went unpaid in 2023–24, a jump of 17% in just one year.
This growing focus means treatments such as botox, fillers and hair transplants are coming under fresh scrutiny. Many clinics have long assumed these procedures qualify for a medical VAT exemption, but HMRC’s view is hardening: unless you can prove the treatment is genuinely for medical purposes, it will be treated as VATable cosmetic work.
The impact can be huge. A recent case saw a London-based hair transplant clinic facing a 17-year review with HMRC over its VAT position. Despite arguments that some procedures were provided to patients recovering from chemotherapy, HMRC pushed back, concluding that much of the work was purely aesthetic, which left the clinic facing a hefty VAT bill.
“We’re seeing HMRC take a far more aggressive stance on VAT in the cosmetic / aesthetic sector,” says Chris Davies, Partner at UHY Ross Brooke. “Many clinics have operated for years under the assumption that their services are exempt, but HMRC now expects clear evidence that treatments are for medical – not aesthetic – purposes. If you can’t demonstrate that, you could face a substantial tax liability.”
In the last two years alone, six cases involving cosmetic providers have gone before the tax tribunal, and there are likely many more to come.
“This is no longer a niche issue,” adds Chris. “HMRC has realised that the cosmetic industry is a high-revenue sector, and they’re actively pursuing backdated VAT where they believe it’s due. Clinics need to urgently review their position before HMRC comes knocking.”
What Could This Mean for Your Clinic?
Let’s put this into perspective:
If your clinic has a turnover of £1m per year, and HMRC decides that a significant proportion of your treatments should have been VATable, you could be facing a backdated VAT bill of up to £200,000 for a single year – plus interest and potential penalties.
If HMRC reviews several years of trading (which it often does), the liability could easily run into hundreds of thousands of pounds, potentially threatening the future of your business.
How We Help Clinics Like Yours
If you run a cosmetic surgery practice or aesthetic clinic, you can’t afford to wait. Many owners have been operating based on outdated advice that no longer reflects HMRC’s tougher stance.
At UHY Ross Brooke, we help businesses in your sector to:
- Review and clarify your VAT position before HMRC does it for you
- Defend against investigations and limit the impact of any historic liabilities
- Plan ahead so you can continue operating confidently and compliantly
“It’s far better to take proactive advice than wait for HMRC to start asking questions,” says Chris. “Once they’re at your door, the options become limited, and the bills can be astronomical.”
Act Before It’s Too Late
If you’re unsure about whether your treatments qualify for the VAT exemption, now is the time to get clarity.
Find out how our audit team and accountants support cosmetic clinics and plastic surgery practices
Or, if you suspect HMRC could already be taking an interest in your business, contact us today, before they come knocking.
