In Epem Limited v HMRC [2023] TC08865, the First Tier Tribunal (FTT) found that supplies made by a medical clinic were standard-rated for VAT. There was insufficient evidence to conclude to what extent exempt supplies may have been made.

  • Epem Limited (Epem) provided a number of medical services to clients, including the treatment of skin conditions, removal of skin lesions, the use of medical devices for the treatment of skin conditions, and the treatment of varicose veins.
  • HMRC requested a breakdown of the services provided by Epem, in order to determine their VAT treatment.
  • Epem subsequently submitted nil VAT returns believing that its supplies were exempt from VAT, under the Health and welfare exemption.
    • HMRC issued VAT assessments on the basis that Epem's supplies did not fall within the exemption.
  • Following a Statutory review, which upheld HMRC’s decision, Epem appealed to the First Tier Tribunal (FTT).

The supply of 'medical care' by certain registered persons may be exempt from VAT.

The FTT found that:

  • Medical care means services intended to diagnose, treat or cure diseases or health disorders or to protect, maintain or restore human health.
  • Where the purpose of a service is to treat or provide care for persons who, as a result of an illness, injury or congenital physical impairment, are in need of plastic surgery or other cosmetic treatment, this may fall within the concept of medical care.
    • Where the surgery or treatment is for purely cosmetic reasons it is not medical care.
  • While Epem considered that the majority of patients attended the clinic because their condition was affecting their mental health, this did not mean the services were medical care.
    • A person’s dissatisfaction with their appearance did not automatically mean that they had a health disorder.
  • Medical care in this context is overseen by the Care Quality Commission (CQC).
    • Epem was not registered with the CQC as it was not providing regulated services and was therefore unable to register.
    • This suggested that Epem was not providing medical care within the context of the VAT Directive.

The FTT concluded that while Epem may have made some exempt supplies of medical care, there was no evidence available to quantify their extent.

  • The general rule applied: all of Epem’s services were treated as standard-rated for VAT.
  • As Epem’s turnover was in excess of the VAT threshold it was required to be VAT registered.

The appeal was dismissed.


This case demonstrates that holding and producing evidence to support a taxpayer’s position is important.

  • Oral evidence of the nature of supplies was insufficient without documentary support to back it up.
  • Epem did not provide any evidence as to any medical assessments made by staff, despite them being requested by HMRC.

In their arguments, HMRC had referred to Epsm’s website, which, along with descriptions of the clinic’s services, described the clinic itself as “one of the foremost authorities in the UK and Europe in the field of medico beauty … bridging the gap between beauty salon and cosmetic surgery”.

This assisted HMRC in arguing that a substantial proportion of Epem’s services related to procedures carried out for cosmetic purposes, rather than exempt medical care.

Useful guides on this topic

Health and welfare: VAT
When does reduced rating, zero rating and VAT exemption apply to services relating to medical care, health and welfare? What are the rules?

Registering for VAT
When should a business register for and charge VAT? What are the VAT registration thresholds? What penalties might HMRC issue for late notification of registration? When do you need to file a VAT return?

Appeals: VAT
How do I appeal a VAT penalty?  How can I request a Statutory Review? How do I appeal an HMRC decision?

Statutory Review (by HMRC)
What is a Statutory Review? When does HMRC offer a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? When does HMRC offer a Statutory Review?

External link

Epem Limited v HMRC [2023] TC08865

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