“Article 131 The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse. Article 132 l. Member States shall exempt the following transactions: … (b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable with those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature; (c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned;”
“84. A "Medical History" would be taken, including questions about "Has your appearance ever caused you to lose confidence" and "Have you ever been depressed about your appearance". 85. An A4 page records the "Initial Consultation". It records 5 things: the patient's age; "Patient Concerns"; "Examination"; "Diagnosis"; and "Plan". 86. By way of example, two such "Initial Consultations" read, in full, as follows: Initial Consultation 1 Age: [redacted] Patient Concerns: Recently treated for breast cancer - surgery and chemo. Chemo has heavily caused facial ageing. Examination: Fine lines and wrinkles to upper face. Lower face is heavy and loose skin. Diagnosis: Collagen loss secondary to chemo. Plan: 1. 2ml Volume and Vycross to midface to lift and stimulate collagen. 2. 3 areas Botox. Initial Consultation 2 Age: [redacted] Patient Concerns: Skin crepiness. Neck - so loose that wattle touches chest. Very upsetting. Excess fat on arms and abdomen despite weight loss, with skin laxity on top. Examination: Neck - very severe sagging. Solar elestosis ++ to face. Subcutaneous fat layer is very grabbable. Diagnosis: Collagen loss. Excess fat. Plan: 1. Aqualyx under chin 2. CoolSculpting x 8 cycles to arms and stomach 3. Facial volumesetion to stimulate collagen. 87. The "Diagnosis" sections on the various forms which we have seen read collagen loss; excess fat; atrophic scarring; verrucae; filamestous wart; tension headaches; solar elestosis; facial asymmetry; skin excess; volume loss. 88. These capture the scope of the Appellant's work in this period and give a clearer, more reliable, insight into the work of the clinic. None of these are diagnoses of any recognised health disorder. 89. They are very cursory documents. They could not properly be described as scientific documents. It is conspicuous that, apart from age, and except for a very few exceptions, neither they (nor the so-called "Medical History") record anything about the patient's physical attributes such as height, weight, or any measurements at all such as blood pressure. They do not record the administration of any tests. There is nothing in the notes to suggest that any of the patients had been referred to the Appellant by another doctor, or for diagnosis of a particular condition. There is nothing in the notes to suggest that the Appellant was minded to refer the patient to another professional.”
“58. While it follows from that case-law that the provision of medical care must have a therapeutic aim, it does not necessarily follow therefrom that the therapeutic purpose of a service must be confined within an especially narrow compass (see, to that effect, Commission v France, paragraph 23). Paragraph 40 of the judgment in Kügler shows that medical services effected for prophylactic purposes may benefit from the exemption under Article 13A(1)(c). Even in cases where it is clear that the persons who are the subject of examinations or other medical interventions of a prophylactic nature are not suffering from any disease or health disorder, the inclusion of those services within the meaning of provision of medical care is consistent with the objective of reducing the cost of health care, which is common to both the exemption under Article 13A(1)(b) and that under (c) of that paragraph (see Commission v France, paragraph 23, and Kügler, paragraph 29). 59. On the other hand, medical services effected for a purpose other than that of protecting, including maintaining or restoring, human health may not, according to the Court's case-law, benefit from the exemption under Article 13A(1)(c) of the Sixth Directive. Having regard to their purpose, to make those services subject to VAT is not contrary to the objective of reducing the cost of health care and of making it more accessible to individuals. 60. As the Advocate General correctly pointed out in paragraphs 66 to 68 of her Opinion, it is the purpose of a medical service which determines whether it should be exempt from VAT. Therefore, if the context in which a medical service is effected enables it to be established that its principal purpose is not the protection, including the maintenance or restoration, of health but rather the provision of advice required prior to the taking of a decision with legal consequences, the exemption under Article 13A(1)(c) does not apply to the service.”
“43. However, the activities in question in the main proceedings, as carried out by FHT, namely the despatch of a kit for collecting umbilical cord blood and the testing and processing of that blood and, where appropriate, the storage of stem cells contained in it, whether taken together or separately, do not appear to have as their direct purpose any actual diagnosis, treatment or cure of diseases or health disorders, or any actual protection, maintenance or restoration of health. 44. In that regard, while the detection of illness may admittedly be one of the possible purposes of collecting stem cells from umbilical cord blood, it seems to be clear from the documents in the court file, and particularly from the contract, that the services provided by FHT are intended only to ensure that a particular resource will be available for medical treatment in the uncertain event that treatment becomes necessary but not, as such, to avert, avoid or prevent the occurrence of a health disorder, or to detect such a disorder in a latent or incipient state. If that were the case, which it is for the referring court to determine in the light of all the relevant facts in the proceedings before it, activities such as those in question in the main proceedings could not, by themselves, be regarded as being covered by the expressions ‘hospital and medical care’ in art 132(1)(b) of Directive 2006/112, on the one hand, or ‘medical care’ in art 132(1)(c) of Directive 2006/112, on the other.”
“12. PFC offers medical services in the field of plastic surgery and cosmetic treatments. At the material time, it provided services involving both cosmetic and reconstructive plastic surgery and also some skincare services. 13. PFC carries out procedures such as breast augmentation and reduction, breast lifts, abdominoplasty, liposuction, face lifts, brow lifts, eye, ear and nose operations and other plastic surgery. That company also offers treatments such as permanent hair removal and skin rejuventation by pulsed light, anti-cellulite treatments and botox and restylane injections.”
“18. According to the order for reference, the purpose of the interventions carried out is, in certain cases, to treat patients who, as a result of an illness, injury or a congenital physical impairment, are in need of plastic surgery. In other cases, the interventions carried out are more as a result solely of the patient’s wishes to alter or improve his physical appearance. Irrespective of their purpose, and from a medical point of view, the various interventions are, according to the referring court, comparable services and can be carried out by the same personnel.”
“21. By its questions, which it is appropriate to examine together, the referring court asks essentially whether art 132(1)(b) and (c) of the VAT Directive must be interpreted as meaning that the supply of services such as those at issue in the main proceedings, consisting of plastic surgery and cosmetic treatments, are exempt from VAT. 22. Thus, by its second question, that court asks more specifically whether a preventive or therapeutic purpose for such services has any effect on the issue of whether they are exempt, which is the subject of the first question. If the answer is affirmative that court asks, by its third question, whether, in order to determine the existence of such a purpose, the subjective understanding the recipients of those services have of them must be taken into consideration. The fourth question asks what effect the fact that such services are supplied by licensed medical personnel has on the assessment to be carried out in the main proceedings.”
“25. Accordingly, the concept of ‘medical care’ in art 132(1)(b) of the VAT Directive and that of ‘the provision of medical care’ in art 132(1)(c) are both intended to cover services that have as their purpose the diagnosis, treatment and, in so far as possible, cure of diseases or health disorders (see Future Health Technologies, paras 37 and 38). 26. In that regard, it should be borne in mind that, whilst ‘medical care’ and ‘the provision of medical care’ must have a therapeutic aim, it does not necessarily follow that the therapeutic purpose of a service must be confined within a particularly narrow compass (see Future Health Technologies, para 40 and the case law cited). 27. Accordingly, it is clear from the case law that medical services effected for the purpose of protecting, including maintaining or restoring, human health can benefit from the exemption under art 132(1)(b) and (c) of the VAT Directive (see Future Health Technologies, paras 41 and 42 and the case law cited). 28. It follows, in the context of the exemption laid down in art 132(1)(b) and (c) of the VAT Directive, that the purpose of the services such as those at issue in the main proceedings is relevant in order to determine whether those services are exempt from VAT. That exemption is intended to apply to services whose purpose is for diagnosing, treating or curing diseases or health disorders or to protect, maintain or restore human health (Future Health Technologies, para 43). 29. Thus, services such as those at issue in the main proceedings, in so far as their purpose is to treat or provide care for persons who, as a result of an illness, injury or a congenital physical impairment, are in need of plastic surgery or other cosmetic treatment may fall within the concept of ‘medical care’ in art 132(1)(b) of the VAT Directive and ‘the provision of medical care’ in art 132(1)(c) thereof respectively. However, where the surgery is for purely cosmetic reasons it cannot be covered by that concept.”
“33. As far as concerns whether the subjective understanding that the recipients of services, such as those at issue in the main proceedings, have must be taken into consideration in the assessment of the purpose of a specific intervention, which is the subject of the third question, it follows from the case law that the health problems covered by exempt transactions under art 132(1)(b) and (c) of the VAT Directive may be psychological … 34. However, the subjective understanding that the person who undergoes plastic surgery or a cosmetic treatment has of it is not in itself decisive for the purpose of determining whether that intervention has a therapeutic purpose. 35. Since that is a medical assessment, it must be based on findings of a medical nature which are made by a person qualified for that purpose. 36. It follows that the fact, referred to in the fourth question, that services such as those at issue in the main proceedings are supplied or undertaken by a licensed member of the medical profession or that the purpose of such interventions is determined by such a professional, may influence the assessment of whether interventions such as those at issue in the main proceedings fall within the concepts of ‘medical care’ or ‘medical treatment’ within the meaning of art 132(1)(b) and (c) of the VAT Directive respectively.”
“ 26. … supplies of a medical or paramedical nature carried out with the aim of protecting, including maintaining or restoring, the health of persons may benefit from the exemption provided for in Article 132(1)(c) of Directive 2006/112 (judgment of5 March 2020 , X (VAT exemption for telephone consultations), C‑48/19, EU:C:2020:169, paragraph 29 and the case-law cited). … 30. In that regard, it is not disputed that a nutrition monitoring service provided in a sports facility may, in the medium- and long-term or viewed very broadly, be a tool to prevent certain conditions, such as obesity. However, it must be noted that the same applies to exercise itself, the role of which is recognised, by way of example, as limiting the occurrence of cardiovascular diseases. Such a service therefore, in principle, has a health purpose but not, or not necessarily, a therapeutic purpose. 31. Accordingly, where there is no indication that it is provided for purposes of prevention, diagnosis, treatment of a condition or restoration of health, and accordingly with a therapeutic purpose, within the meaning of the case-law cited in paragraphs 24 and 26 of the present judgment, which it is for the referring court to determine, a nutrition monitoring service, such as that provided in the case in the main proceedings, does not fulfil the criterion of an activity in the public interest common to all the exemptions laid down in Article 132 of Directive 2006/112 and, consequently, does not fall within the scope of the exemption laid down in Article 132(1)(c) of that directive, with the result that it is, in principle, subject to VAT. 32. That interpretation does not contravene the fiscal neutrality principle, which precludes in particular two deliveries of goods or two supplies of services which are identical or similar from the point of view of the consumer and meet the same needs of the consumer, and which are therefore in competition with one another, from being treated differently with regard to VAT (see, to that effect, judgment of17 December 2020 , WEG Tevesstraße, C‑449/19, EU:C:2020:1038, paragraph 48 and the case-law cited), since, in the light of the objective pursued in Article 132(1)(c) of Directive 2006/112, nutrition monitoring services provided with a therapeutic purpose and nutrition monitoring services without such an objective cannot be regarded as identical or similar from the point of view of the consumer and do not fulfil the same needs on the part of that consumer. 33. Any other interpretation would have the consequence of extending the scope of the exemption laid down in Article 132(1)(c) of Directive 2006/112 beyond the rationale reflected in the wording of that provision as well as the heading of Chapter 2 of Title IX of that directive. Any service performed in the exercise of a medical or paramedical profession, having, even in a very indirect or distant manner, the effect of preventing certain health conditions, would fall within the exemption laid down by that provision, which would not correspond with the intention of the EU legislature and the requirement that such an exemption be interpreted strictly, as recalled in paragraph 22 of the present judgment. As the Advocate General observed in point 61 of her Opinion, a merely uncertain link with a health condition, without a specific risk of health impairment, cannot suffice in that regard.”
“89. The scope of the exemptions for medical care contained in art 132(1)(b) and (c) of the Directive (and its predecessor art 13A(1)(b) and (c) of the Sixth Directive) have been the subject of a number of decisions by the CJEU. The main principles can be summarised as follows: (1) The exemptions envisaged in art 13 of the Sixth Directive are to be interpreted strictly since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person … (2) Those exemptions constitute independent concepts of Community law whose purpose is to avoid divergences in the application of the VAT system from one Member State to another … (3) As regards the place where the services must be supplied, in contrast to art 132(1)(b) which concerns services encompassing a whole range of medical care normally provided on a non-profit-making basis in establishments pursuing social purposes such as the protection of human health, art 132(1)(c) applies to services provided outside hospitals and similar establishments and within the framework of a confidential relationship between the patient and the person providing the care, a relationship which is normally established in the consulting room of that person: Kügler at para 35 and EC Commission v UK (Case C-353/85 ) at para 33. … (6) The concept of ‘provision of medical care’ does not lend itself to an interpretation which includes medical interventions carried out for a purpose other than that of diagnosing, treating and, in so far as possible, curing diseases or health disorders: D v W (Österreichischer Bundesschatz intervening) (Case C-384/98 )[2002] STC 1200 ,[2000] ECR I-6795 , at para 18. (7) Although the provision of medical care must have a therapeutic aim, it does not necessarily follow that the therapeutic purpose of a service must be confined within an especially narrow compass. Thus, medical services effected for prophylactic purposes may benefit from the exemption under art 132(1)(c). Even in cases where it is clear that the persons who are the subject of examinations or other medical interventions of a prophylactic nature are not suffering from any disease or health disorder, the inclusion of those services within the meaning of provision of medical care is consistent with the objective of reducing the cost of health care, which is common to both the exemption under art 132(1)(b) and that under (c) of that Article: D’Ambrumenil v Customs and Excise Comrs (Case C-307/01 ) EU:C:2003:627,[2005] STC 650 ,[2004] QB 1179 (‘d’Ambrumenil’), at para 58. (8) It is the purpose of a medical service which determines whether it should be exempt from VAT.
“61. … I record three basic propositions of law which are not in dispute: (i) First, the exemptions constitute independent concepts of Community law which must be placed in the general context of the common system of VAT (Kügler para 25). (ii) Secondly, the exemptions are to be interpreted strictly (but not restrictively) since they constitute exceptions to the general principle of taxation (Kügler para 28). (iii) Thirdly, the analysis of what is being supplied depends, in any given case, on economic realities of the transaction, that being a ‘fundamental criterion’ for the application of the common system of VAT (see Revenue and Customs Comrs v Airtours Holidays Transport Ltd[2016] UKSC 21 ,[2016] STC 1509 ,[2016] 4 WLR 87 , at [48], citing Revenue and Customs Comrs v Loyalty Management UK Ltd, Baxi Group Ltd v Revenue and Customs Comrs (Joined cases C-53/09 and C-55/09) EU:C:2010:590,[2010] STC 2651 ,[2010] ECR I-9187 , at paras 39–40); the contracts are the most useful starting point in that exercise, but not necessarily the end point: see WHA Ltd v Revenue and Customs Comrs[2013] UKSC 24 ,[2013] STC 943 ,[2013] 2 All ER 907 . The UT recognised this approach in terms at UT [96], see para [33] above, and their encapsulation of the approach was not subject to any challenge in this appeal.” (i) First, the exemptions constitute independent concepts of Community law which must be placed in the general context of the common system of VAT (Kügler para 25). (ii) Secondly, the exemptions are to be interpreted strictly (but not restrictively) since they constitute exceptions to the general principle of taxation (Kügler para 28). (iii) Thirdly, the analysis of what is being supplied depends, in any given case, on economic realities of the transaction, that being a ‘fundamental criterion’ for the application of the common system of VAT (see Revenue and Customs Comrs v Airtours Holidays Transport Ltd[2016] UKSC 21 ,[2016] STC 1509 ,[2016] 4 WLR 87 , at [48], citing Revenue and Customs Comrs v Loyalty Management UK Ltd, Baxi Group Ltd v Revenue and Customs Comrs (Joined cases C-53/09 and C-55/09) EU:C:2010:590,[2010] STC 2651 ,[2010] ECR I-9187 , at paras 39–40); the contracts are the most useful starting point in that exercise, but not necessarily the end point: see WHA Ltd v Revenue and Customs Comrs[2013] UKSC 24 ,[2013] STC 943 ,[2013] 2 All ER 907 . The UT recognised this approach in terms at UT [96], see para [33] above, and their encapsulation of the approach was not subject to any challenge in this appeal.”
“27. We agree. Those paragraphs of the Court of Appeal's decision endorse (unsurprisingly) a decision-making approach which should be informed by a strong focus on the facts of the case. The Court of Appeal accepted a submission that the outcome of many of the reported decisions can be seen to have been influenced by the particular facts, judged (as the Court of Appeal said) "through the lens of commercial and economic reality" so as to determine whether the appellant is making supplies of medical care or not. 28. We are bound by the Court of Appeal's analysis of Item 1 (as well as, so far as adopted by the Court of Appeal, the Upper Tribunal's analysis). We remind ourselves that we (as a fact-finding Tribunal) must focus on the facts, and that, as part of our overall evaluative exercise, we should not forget to look at the facts through the lens of commercial and economic reality (which is an approach regularly encountered in relation to VAT). That is what we have done.”
“63. Dr Shotter holds a number of medical degrees, beginning with an MBChB in medicine and surgery from the University of Leeds. HMRC accept that Dr Shotter is a skilled and ethical professional. We agree. She is committed to her work and the business which she directs. She is a determined and competent business person. She established the Appellant, has applied a clear-eyed business vision to it, and has been the driver of its growth and success. 64. But we have no hesitation in deciding that the services which the Appellant offers are not exempt within the proper meaning and effect of the legislation. 65. We do not accept that what is being done is "diagnosing, treating and, in so far as possible, curing diseases or health disorders". 66. According to the Oxford English Dictionary, "diagnosis" is "determination of the nature of a diseased condition; identification of a disease by careful investigation of its symptoms and history; also, the opinion (formally stated) resulting from such investigation." 67. There is very little evidence of diagnosis in the above sense. Diagnosis in the above sense did not invariably take place even in relation to the small number of clients for whom we were provided with details. 68. The weight of the evidence - written and oral - is that people are not using the Appellant's services because of diagnoses - arrived at following careful investigation of symptoms and history, by an appropriately qualified medical practitioner, in an appropriate setting - but rather simply because they want to use the Appellant's services. 69. Put differently, the catalyst for use of the Appellant's services is not "diagnosis", but is something else instead. Although we perhaps do not need to go further, the evidence is that people are actuated to use the Appellant's services because they want to - not because they are encouraged to do so by a medical practitioner. 70. This is very important to the overall analysis because diagnosis is the starting point of medical care, and the backdrop against which medical treatment takes place. Without diagnosis, "treatment", in the sense captured by the exemption, is not something which is being done responsively to a disease or a health disorder. It is an activity which is being done 'untethered' from an anterior diagnosis.”
“104. Standing back, people are going to the clinic intending to have a cosmetic procedure done there. Even if they are unhappy with their appearance, they are not going to the clinic to see, or expecting to see, a psychiatrist, a counsellor or a therapist. The service being provided is and remains a cosmetic procedure even if (for example) it is being done by a person who is a good listener, or has the training and/or experience to engage with people's psychological or emotional needs. 105. The cosmetic treatments are not being provided essentially for medical purposes, but are for non-medical - cosmetic - purposes. The fact that people go to the clinic feeling unhappy with some aspect of their appearance, and (at least sometimes) are happier when something is done at the clinic about that aspect of their appearance, does not mean that the treatment is medical, or has a therapeutic aim. So, by way of example, the so-called 'localised fat reduction' - a technology-led targeting of fat pads which (in Dr Shotter's words) "can cause all sorts of problems confidence-wise and in terms of comfort" - is not the same as a weight-loss service. … 112. Helping someone to achieve goals in relation to their appearance - which is what this clinic does - is not treating someone's mental health status, but is going to their self-esteem and self-confidence. It is a misuse of language to say that this is healthcare in the sense that it would fall within Item 1. 113. We do not regard what is being done as "medical care", "coming within the established meaning of that term". Although what is done is being done with care, it is not, in our view, "medical". Nor do we accept that the services "have a therapeutic aim, that they consist of the diagnosis, treatment or cure of disease or ill-health." We agree with HMRC that clients sought the clinic's services primarily for aesthetic reasons, and in order to improve their appearance.”
“21. … So far as material to this appeal, it is not a condition of exemption that the relevant purpose must be the primary or the principal purpose. 42. … if the doctors engaged by the Appellant provide cosmetic treatments for a purpose which they consider to be a medical purpose, the only question that remains is whether the doctors were treating a health disorder.”
“[47] This approach [of looking at the economic realities of the transaction as a whole] appears to me to reflect the approach of the Supreme Court in the subsequent case of WHA Ltd v Revenue and Customs[2013] UKSC 24 ,[2013] STC 943 ,[2013] 2 All ER 907 where at [27], Lord Reed said that ‘[t]he contractual position is not conclusive of the taxable supplies being made as between the various participants in these arrangements, but it is the most useful starting point’. He then went on in paras [30]–[38] to analyse the series of transactions, and in para [39], he explained that the tribunal had concluded that ‘the reality is quite different’ from that which the contractual documentation suggested. Effectively, Lord Reed agreed with this, and assessed the VAT consequences by reference to the reality. In other words, as I said in Secret Hotels2 Ltd (formerly Med Hotels Ltd) v Revenue and Customs Comrs[2014] UKSC 16 ,[2014] STC 937 ,[2014] 2 All ER 685 (at [35]), when assessing the VAT consequences of a particular contractual arrangement, the court should, at least normally, characterise the relationships by reference to the contracts and then consider whether that characterisation is vitiated by [any relevant] facts.”
“10. The Court of Appeal accepted counsel for HMRC’s submission that whether or not Mainpay’s supplies fell within the scope of the medical care exemption fell to be determined on the facts of the case, judged through the lens of commercial and economic reality (CoA, §78). 11. The Appellant respectfully agrees with and adopts paragraphs 76 and 78 of the Court of Appeal’s judgment. In particular, the Appellant agrees that the question of whether the medical care exemption is engaged in any given case will turn on the particular facts.”
“107. This is a good example, because it captures several of the features which we have been discussing. The procedure is skin tightening. It is being done because the client has lost facial tone. But the client has not been diagnosed by his GP or another medical professional with loose skin. It is recorded that he has been diagnosed with depression, but that diagnosis was not made at this clinic, but was made by someone else, elsewhere. It could not have been made by Dr Shotter because that is not her job. We do not know what the prescribed treatment, if any, for this client's depression was. But it is not said that the prescription or even recommended treatment for his depression included skin tightening. A procedure for tightening skin is available, and the client desires that it be done. The client wants it to be done because the client thinks that it may make him feel better about his appearance, and so happier overall. So, and even though skin tightening may perhaps end up making the client happier, and may even end up alleviating his depression, it is not medical treatment within the exemption. The same perhaps goes for talking about it to a sympathetic interlocutor - Dr Shotter - in a confidential environment. But the client is at the clinic to have his skin tightened: not to undertake counselling. He was just lucky to have encountered a compassionate individual.”
“70. … diagnosis is the starting point of medical care, and the backdrop against which medical treatment takes place. Without diagnosis, "treatment", in the sense captured by the exemption, is not something which is being done responsively to a disease or a health disorder. It is an activity which is being done 'untethered' from an anterior diagnosis.”
“100. Much emphasis was placed on Dr Shotter's training and experience, especially in terms of psychology. For example, she undertook a psychiatry placement as an undergraduate, and had worked in the NHS (whilst training as an anaesthetist) with patients who were psychologically vulnerable. The general thrust of this was to seek to characterise what is being done by her, or under her direction, in the clinics as of a psychological nature. 101. We accept that the innate character and temperament which led her to train as a doctor in the first place, will have been supplemented by the acquisition of additional skills through her learned experience in the NHS. But we do not consider that the appropriate tax treatment of what is being done should ultimately be made to depend on the identity of the person doing it, or whether that person has psychological training or experience.”
“17. … The court must recognise that it is for a supplier, whose supplies would otherwise be taxable, to establish that it comes within the exemption, so that if the court is left in doubt whether a fair interpretation of the words of the exemption covers the supplies in question, the claim to the exemption must be rejected.”