HM Revenue & Customs (HMRC) has lost a tax tribunal appeal over the VAT treatment of ultrasound scanning services to pregnant women.
The case centred on the fact that HMRC argued that the scanning services should be standard rated, while private clinics stated that they should be exempt as supplies of medical care.
The First Tier Tribunal (FTT) appeal hearing was told that Window to the Womb, a franchise that operates high street clinics offering ultrasound packages including 4D images, conducts more than 120,000 ultrasound scans every year.
The company argued that from 2015, the service being offered was medical care in the form of diagnostic scanning, and as a result, should be exempt from VAT. An important distinction was made, in that, all franchises use qualified sonographers, rather than ‘ultrasound technicians’.
The sonographers are required to be members of the Society of Radiographers, and hold professional indemnity insurance, while the company stated that using qualified sonographers adds £100,000 per clinic per year in costs.
The FTT stated that: “The question is not whether there is a single supply or a multiple supply. It is agreed that each package is a single supply. The real question is whether those single supplies are properly characterised as supplies of medical care.”
The tribunal also stated that it was notable that 79 per cent of customers purchase scans for the principal purpose of obtaining the well-being report, or information about the growth of the foetus. The judge went on to state that ‘…it is likely that those remaining 21% are not purchasing scans principally for the 4D imagery.’
As a result, the tribunal ruled in favour of Window on the Womb, stating that its scanning services should be exempt from VAT as they examples of medical care.
For help and advice on matters relating to VAT, contact our expert team at Milsted Langdon today.