In a ruling which underlines that Her Majesty’s Revenue and Customs (HMRC) are not always right when it comes to correctly interpreting the law, an online provider of prescription glasses has convinced the First-Tier Tribunal that the services it provides to its customers should be partially exempted from VAT.
Although its web-based business methods did not involve face-to-face contact with customers, Prescription Eyewear Limited, which trades as ‘Glasses Direct’, argued that the supply of every pair of its glasses is supervised by a qualified dispensing optician and that their professional input should benefit from the medical services exemption from VAT under item 1(b) of group seven of schedule nine of the VAT Act 1994.
The company argued that the exempt element of its service should be reflected in a 13.4% cap on its VAT liabilities and sought a VAT rebate of almost £420,000 in respect of sums which it claimed to have over-paid. However, HMRC responded that the company’s methods were very different from those of a High Street optician and that the provision of glasses via the company’s website was a single, standard-rated, supply.
Allowing the company’s appeal, the Tribunal noted that trained opticians were on hand to help customers choose the right frames and lenses and to offer eye care advice via the website, phone and live chat. Every order was reviewed and approved by a professional who ensured that finished products were fit for purpose and the company provided a comprehensive after-sale service.
The Tribunal found that the company’s opticians provided all the advice and supervision which were a feature of High Street opticians shops and that their significant input did amount to medical care within the meaning of the exemption. The Tribunal did not rule upon the correct level of VAT that should now be paid by the company, or upon the value of any rebate due, and expressed the hope that those issues would now be agreed.