Hair loss procedure does not qualify for zero rating

The taxpayer used a hair loss procedure known as the Kinsey System which was described as a medical treatment for ‘follicularly challenged’ patients. The sales were treated as zero rated on the basis that they were either a supply of goods to a disabled person for their domestic or private use or the service of adaptation repair or maintenance of goods for disabled persons (VATA 1994 Sch 8 Group 12). The interpretation of the legislation is in HMRC Notice 701/7.

HMRC started a compliance review in April 2020 and the officer decided that the supplies were standard rated on the basis that they did not tick the boxes for any zero rating in the legislation. The decision was upheld in an internal review in January 2022.

The Kinsey System involved an initial consultation for the patient followed by the manufacture of their initial...