HMRC targeting cosmetics businesses
If you run a cosmetics, aesthetics, or beauty business, you may already have seen the headlines: HMRC is cracking down hard on the sector. And it’s not hard to see why.
In 2023–24 alone, HMRC believes billions of pounds in VAT went unpaid. Around £9.5 million of that is thought to come from cosmetics businesses, and the tax authority has made it very clear it won’t let that slide. Tribunal cases are stacking up, and investigations are on the rise.
15th September 2025
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David Gage See profile
A lot of this comes down to confusion over what counts as “medical.” Genuine medical services are VAT exempt. But here’s the catch: most treatments offered in salons and clinics – Botox, fillers, anti-ageing treatments, hair transplants, even contact lenses – don’t qualify as medical when they’re for cosmetic or aesthetic purposes.
The fact that a medically qualified professional might perform them doesn’t change that. HMRC has underlined this point with fresh guidance for the hair and beauty industry (guidance for hair and beauty professionals in May 2025).
The reality is that many businesses have been relying on outdated assumptions or incomplete advice, and now HMRC is calling time on that.
We’re already seeing the consequences. One clinic providing hair transplants to former chemotherapy patients was found liable for almost two decades’ worth of unpaid VAT on other services. In the past two years, six cases have reached the First Tier Tribunal, and many more investigations are underway.
So if you’re in this sector, ask yourself: am I absolutely sure which parts of my business are VAT exempt, and which aren’t?
Waiting for HMRC to knock on your door is never a good strategy. Their investigations are thorough, and if they find you’ve got it wrong, the financial and reputational costs can be significant.
So don’t rely on guesswork. The government has an online tool that can help check employment and tax status, but that’s only a starting point. VAT rules are nuanced, and what applies to one business won’t necessarily apply to another.
At Old Mill, my team and I specialise in untangling VAT complexities for businesses just like yours. We can:
- Review your VAT position and make sure you’re compliant
- Clarify which treatments are exempt and which aren’t
- Support you if HMRC opens an investigation
- Represent you in reviews and tribunal appeals if needed
The rules are changing fast, and HMRC is moving faster. Taking action now gives you peace of mind and keeps your business on the right side of the law.
If you’re unsure about where you stand, let’s have a conversation. A quick review today could save you years of stress tomorrow.
If you would like to discuss this further, please contact our VAT specialist David Gage or get in touch here.
