In Mark Glenn Ltd v HMRC [2024] TC09255, the First Tier Tribunal (FTT) found that the supply of a female hair loss treatment system could not be zero-rated for VAT purposes as hair loss was not a disability.
Mark Glenn Ltd provided its customers with a method of treating female hair loss, known as the Kinsey System.
- The Kinsey System involves a custom-made wig being placed over the area of hair loss with additional wig mesh where necessary.
- Existing strands of human hair underneath the mesh are pulled through with the wig sitting in place like a second skin, with native hair poking through the mesh alongside the wig hair.
- The hair is styled and cut. The client typically returned every six weeks for maintenance of the system.
- None of the staff of Mark Glenn Ltd were medical practitioners.
- Mark Glenn Ltd treated its supplies of the Kinsey System as zero-rated for VAT.
- In April 2020, HMRC opened a compliance check and subsequently issued a VAT assessment of £165,821 and Notices of Amendment totalling £76,814 on the basis that the supplies were standard-rated. This position was upheld at Statutory review.
- Mark Glenn Ltd Appealed to the First Tier Tribunal (FTT).
It was agreed that the Kinsey System represented the Supply of a service and not the supply of goods.
To be Zero-rated under Group 12, Schedule 8, of VATA 1994, the supply had to be made to a disabled person. The meaning of a disabled person is “any person who is chronically sick or disabled”.
VAT Notice 701/7 states that a person is chronically sick or disabled if they are a person with a:
- Physical or mental impairment that has a long-term and substantial adverse effect on their ability to carry out everyday activities.
- Condition which the medical profession treats as a chronic sickness, such as diabetes.
The FTT found that:
- Significant hair loss or baldness in women is not, in itself, a disability. It is not:
- An impairment. In addition, it does not have a long-term and substantial adverse effect on the ability of women to carry out everyday activities.
- A chronic illness: it is not treated as such by the medical profession.
- The Kinsey System was not designed solely for the relief of a severe impairment or severe injury nor was it the supply of services adapting goods to suit a disabled person’s condition.
- It was a labour-intensive system allowing for a semi-permanent transformation which required regular maintenance. It was not the adaptation of a wig.
- Given the need for maintenance, to find that the Kinsey System was a supply of services of adapting goods would be to dissect artificially what the Kinsey System does.
Zero rating did not apply: the appeal was dismissed.
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