Over the summer the Upper Tribunal released their decision in the Align Technology case. This was the appeal by HMRC against the decision by the First-tier Tribunal in favour of the taxpayer.
The Align Technology companies made supplies of orthodontic appliances to dentists which they treated as exempt dental prostheses (items 2 & 2A, Group 7, Schedule 9, VATA 1994). The FtT referenced the definitions of dental prostheses as shown in two specialist medical dictionaries that included orthodontic retainers and appliances as prostheses. It concluded that the aligners were prostheses.
HMRC offered no other grounds of appeal and so the appeal was allowed.
The Upper Tribunal has now over-turned that decision and have concluded that aligners are NOT prostheses for the purposes of the VAT exemption. The term “dental prostheses” means “artificial items which replace missing or damaged teeth”.
What should dentists do now?
The next steps that dentists need to take will depend on the action that they took (or not) following the FtT decision, whether they are now treating aligners as exempt and whether they have any assessments from HMRC. It is not clear at the moment whether Align Technology will seek to appeal to the Court of Appeal but should they do so, dentist will want to protect their VAT position so that historic periods can follow any successful appeal.
How Xeinadin can help?
The Xeinadin VAT team can:
- Review the individual position to date
- Advise on the VAT treatment of current supplies while any appeal is pending
- Recommend tailored next steps
- Assist with the preparation of any disclosures necessary to HMRC
- Submit protective repayment claims to HMRC to follow any future appeal
If this case affects you and you would like to discuss your options then please get in touch with a member of the VAT team at Xeinadin.
