Does the sale of intravenous vitamin drips qualify as a VAT exempt medical service? This is the question facing a recent VAT tribunal in a fairly groundbreaking decision in the case ‘Get a Drip Limited’ (Case Number: TC09509).
What Was the Get a Drip VAT Tribunal About?
Get a Drip is said to be the UK’s leading longevity clinic. It offers several lines of health, well-being, and longevity services.
The primary service offered by the company is the administration of intravenous vitamin drips and injections. The drips are provided by appointments booked at one of the company’s clinics or by booking a home visit for someone to administer the drip.
It emerged from the tribunal hearing that any medical assessments carried out on recipients prior to treatment are not particularly comprehensive and do not seek to diagnose or treat specific health conditions.
The treatments’ rejuvenating benefits are aimed at helping to treat existing conditions, ease symptoms, and promote health and wellness. The company claims that the drips enhance longevity and it promotes benefits such as improved energy levels and immune support.
The company initially registered for VAT on the basis that the drips qualified for VAT zero-rating as ‘qualifying goods on prescription dispensed to an individual for their personal use’. However, after some toing and froing, HMRC ruled that the company made a single standard rated supply of goods.
Get a Drip argued that VAT exemption applies because the drips and injections were administered by qualified medical staff and registered health professionals (GMC registered Doctors, NMC registered Nurses, and HCPC registered Paramedics) and met the VAT definition of medical care.
Understanding VAT Exemption for Medical Services
For a service to fall within the exemption for healthcare services, there are 2 key tests:
- the services must be performed or directly supervised by registered medical and health professionals who are on the relevant statutory register. This test was met and there was no dispute over this;
- the primary purpose of the services must be the protection, maintenance or restoration of the health of the person concerned. HMRC’s counter argument was that Get a Drip’s offering did not meet the criteria for this.
The decision effectively hinged on whether the primary purpose for purchase by customers was for medical reasons.
Decisions in recent cases resulting in HMRC wins, such as Illuminate Skin Clinics Ltd, show that, just because a service is performed by a medical practitioner, that service is not automatically VAT exempt. There must be a clear therapeutic aim supported by medical evidence in the form of patient notes.
In Illuminate’s case, supplies of aesthetic, skincare and wellness treatments were considered standard rated because they were not being provided to prevent or treat a medical ailment, but for non-medical, cosmetic purposes. Most of the VAT litigation to date focuses on this distinction, with grey areas arising with more subjective procedures eg ‘droopy eyelid’ procedures – do these improve vision if it is impacted or is the work purely aesthetic? The answer will vary by patient, hence the importance of an audit trail of patient notes.
Similarly, in Skin Rich Ltd and in Aesthetic-Doctor.com Ltd, the services offered did not qualify for VAT exemption because the appellants could not demonstrate that they were provided for medical as opposed to cosmetic purposes.
Does Wellness Count as Medical Care?
Get a Drip’s case considered a slightly different angle, being wellbeing, so very much in the ‘prevention’ area of the VAT tests set out above. It considered the marketing and promotion of the products, noting that this highlighted benefits such as the effect on general wellness, energy boosts, and aesthetic benefits, rather than addressing what you might consider as traditional medical conditions.
It also looked at the general customer base, noting that most recipients of the drips were healthy individuals seeking improvements to their general well-being, and not patients requiring medical treatment. Again however the point of diagnostic medical checks (accepted to be VAT exempt) is to prevent future illness or to minimise the severity – accepted as the right approach to healthcare.
The tribunal considered Get a Drip’s expert evidence provided by a qualified doctor including his report on samples from treatments given to eleven randomly selected customers of Get a Drip.
Each sample identified at least one condition which the doctor recognised as a health condition, together with treatment, which they considered to be suitable or appropriate for that condition.
Almost all the samples included symptoms of tiredness and fatigue, and/or of persons seeking the promotion of energy levels and general well-being.
Whilst you could argue that these are not medical conditions in themselves and that the concept of “well-being” may be vague and entirely subjective, the expert witness contested that they are all “very real complaints that are notoriously challenging for GPs and emergency departments to offer treatment for.” You only have to look around an NHS ward to see the number of patients admitted who are receiving drips for rehydration and electrolyte deficiencies which have resulted in wider medical issues that aren’t addressed until the balance is restored.
The doctor emphasised the importance of well-being and its increased prevalence in medical literature and the medical environment generally.
Indeed, the World Health Organisation definition of health which he said was widely used within medical practice, applies the following terms: “A state of complete physical, mental and social well-being and not merely the absence of disease and infirmity”.
Get a Drip suggested that the main purpose of their supplies was therapeutic because in each case customers had a health concern, had at least one health condition identified, and treatment was given.
In response, HMRC contested that some of the medical conditions mentioned were minor – for example, headaches. Get a Drip also marketed drips which treat conditions such as hangovers and excessive partying.
It was submitted to the tribunal that where the main purpose of a service is the general improvement and enhancements of wellbeing, that the service must fall outside of the medical exemption.
However, the tribunal agreed with Get a Drip that there was no requirement of severity that a medical condition had to meet to fall within the medical exemption and also that there was also no moral judgment – the circumstances giving rise to a medical condition should not impact whether the exemption applies.
A hangover may be self-inflicted, but you could argue that lots of medical conditions are in some way, at least partly, self-infected, and these aren’t excluded from VAT exemption.
The Tribunal’s Final Decision
The tribunal concluded that on the balance of probabilities the supply of the drips amounted to medical interventions and that they are administered by suitably qualified medical professionals acting within the scope of their qualifications, so they should be exempt from VAT.
Society has seen an increased focus in the profile of health and well-being and in new related products and services coming on to the market. We do not expect this will be the last issue that will be presented before the VAT tribunal.
If you would like to discuss the VAT liability of your activities in this area, please get in touch.
