Upper Tribunal Rules Hair Loss System for Severe Baldness Qualifies for VAT Zero Rating

Mark Glenn Ltd – UT – Kinsey System for clients with significant hair loss – whether zero rated – yes – taxpayer win

• The Kinsey system, designed for clients with significant hair loss, utilizes a mesh and existing hair strands, with color-matched fibers added as needed. The process requires two technicians working together for approximately 8 hours and includes ongoing maintenance every six weeks, costing around £2,400 annually.
• The taxpayer’s appeal centered on whether their service qualifies for zero-rating under VAT regulations for adapting goods for disabled individuals. The initial tribunal concluded that significant hair loss does not constitute a disability, but the Upper Tribunal found this reasoning inadequate and recognized severe hair loss in women as an impairment adversely affecting daily activities.
• The Upper Tribunal ruled that the services provided by the Kinsey system involve adapting goods (hairpieces and strands) to suit the condition of individuals with severe hair loss. As a result, these supplies fall under the zero-rated provisions of VAT legislation, allowing for tax exemption.

Source KPMG

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• The Upper Tribunal (UT) allowed the appeal in Mark Glenn Ltd v HMRC, ruling that the “Kinsey” hair loss replacement system qualifies for zero-rated VAT as an aid for the disabled.
• The UT found that severe hair loss in women constitutes a disability under the ordinary meaning of the term.
• The UT determined that the system involves adapting goods (the hairpiece) to suit the specific condition of the disabled person.
• The First-tier Tribunal (FTT) had erred in law by not recognizing baldness as a disability and by mischaracterizing the supply as a service rather than an adaptation of goods.
• Arguments based on fiscal neutrality and Edwards v Bairstow were rejected by the UT.

Source: claritaxnews.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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