Dr James, 0s:

That in dentistry is something that we all thought that we were having to play for, in that we didn't have to worry about it at all. But actually, that is changing a lot of the stuff that has changed with my retrospectively as well. And that's when I did it and joined my expert comments and that's an old days in it. So we're going to be clicking up in dentistry, and all of a sudden, this is a hot topic, what has changed recently. What we need to know and what we can do about it going forwards looking forward to this episode is ever. As ever, you can claim your CPD for this episode within the official dentist and fitness Smart Money Members Club. Smart Money Members Club also includes multiple mini courses and webinar series on finance for dentists, including how to become as tax efficient as possible, as well as understanding investing. All of this content comments as verifiable CPD, and you can download your certificates there and then upon the completion of each lesson. In addition to this, we also include a whopping 10% discount on your dental indemnity and 5% discount on lab bills for dental principals, amongst other perks and discounts for members. Please use the link in the description to claim your verifiable CPD for this episode. Veronica, Vanessa, welcome to the Dentists Who Invest podcast. Vanessa, we've of course have welcomed you before. Veronica, this is your first time, and I'm looking forward to it because we're gonna get into the topic of VAT in dentistry. Because once upon a time we thought that it didn't apply to us as dentists, barring some extremely limited circumstances, but that is not the case anymore, which is why I'm particularly interested to uh hear what uh Veronica has to say because Veronica is a VAT expert, and we've never had a VAT expert on this on the podcast before, and that's going to complement uh Vanessa's dental wisdom extremely well. So, Ganny's throwing the mic over to you. Where do you think we should start? Probably probably the first question to ask, and I don't know who wants to take up the reins on this one, either of you or or both of you. Um probably the very first question to ask is why is everybody all of a sudden talking about VIT with regards to UK dentists?

Veronica, 2m 11s:

I think uh the most recent case that mentioning VAT and dentistry in the same breath was the Invisalign case, where they were looking at whether the the provision of the gum shields and the the aesthetic for the for the teeth were orthodontic appliances or whether they were dental processes. Dental processes would have been wonderful because it then the status quo would have continued, you wouldn't have had any VAT. Unfortunately, the court ruled that they were, in fact, orthodontic appliances and VAT is due. What that means to the dental practice is you've now got a cost that's escalated that's coming into you. So where before you got a flat fee of uh let's say 200 pounds, you're now going to have a flat fee of 240 pounds. And because you're not VAT registered, you cannot recover that VAT, so your cost base has gone up. So I understand the concern with that. What's happened though is there are other cases that are going on that don't look at your cost base because really the VAT charge in the in the case of Visaline is in Visaline's problem, and they have to charge it and collect it from you. But uh there are other cases that affect your supplies to your patients and other supplies that you have, which may mean that you have to account for VAT and some of your supplies to customers that are not used to getting a VAT charge from you. So we can talk through what that will be. Um but I think if we go back to the costs, just to we'll deal with that first. You will have other costs coming into your business that up till now you've not thought to VAT on them. And one of those may be services from overseas, where you've bought in uh advertising services from Google, for example. Um if there's those are coming from Google in the Netherlands or in Ireland, they fall under what's called the reverse charge, which means you didn't get charged VAT when you bought them. But because you're outside the EU and in the UK, you have to treat them as if you had received a vatable supply. So you have to charge yourself VAT and then reclaim it if you can if you're able to according to your other supplies. But those that charge to yourself becomes part of your taxable turnover for VAT. So if you've brought in £200,000 of advertising services, that's a taxable turnover of £200,000 regardless of everything else you do, and you've now got a requirement to register for VAT. So you need to be really careful about services. They might be marketing services, they might be, there's all sorts of services you can buy in, but the point is it's services from overseas. You need to check if they're under the reverse charge, and if they are, you need to know how much they're going to cost. Because again, you will have a block of VAT on recovery if you're not VAT registered or you're only making dental supplies. But the fact of having the reverse charge means you have to VAT register in any case. One of the things is to look at is what are you buying in? Then you've got to look back at, well, what am I selling? Dental services, every dentist tells me they're all exempt, we don't have any of that. 99.9% of the time, that's probably correct, but it's not 100% correct, and I'll talk that through in a minute. But you may have other supplies that are not in themselves dental, um, as in certain as in the dental services. You might be selling products over the counter, retail sales. Have you checked the value of those in a year? If they're over 90,000, the current level's 90,000, but bear in mind retrospectively it was less. If they're over the threshold, that would give you a requirement to register. If you've got retail sales and reverse charge sales, you need to add the two together. And uh if it's 89,999 in a rolling 12-month period, you have no requirement to register. You don't have to account for VAT on those. If, however, uh you've got 90,001, you've got a requirement to register, and that captures all of that income in that year. You don't get degrees with the 90,000. It's looking at what are your income sources and checking the VAT liability of those. And Vanessa, I don't know if you want to, if there's other ones that you've thought of that we can add in.

Vanessa, 6m 9s:

No, no, it's mostly it's mostly the what clients will typically call the reception sales, or I've seen it described as pharmaceutical sales. So quite often, if you're thinking about it as in the lines of pharmaceutical sales, you're thinking it's just medicines and so on, but it might not be. It really just boils down to the same thing. It's it's potential, potentially vatical retail sales from the reception desk. And and that could be you know walk-ins, which are can be quite uncommon, or it can be people leaving the dental surgery and buying products recommended to them. Okay.

Veronica, 6m 41s:

And certainly if those products are standalone, so as you say, you can come and lift them off a shelf and say, I'd like some of that, please, and pay your money and leave. Those fall into that taxable camp. If though you have products that you're selling to the patients, but they're part of the treatments, so they're intrinsic part of the treatments. You have to have, you know, certain you might use Botox as an injectable to just create numbness so that you can then do the treatment. It might be some sort of gel that you put on. There's all sorts of products you use. He's a bit like a painter and decorator. You don't buy the paint, you buy the decorator and it brings the paint with them. You're in that category. So as long as they're part of the treatment, they will follow the liability of the treatment. So exempt dental services, the products immediately associated with them will also be exempt. It's where there's a divide, uh and then the treatments being delivered uh in one instance and in the products sold separately, but they're not connected, therefore you've got two different liabilities. So you need to be very clear, both in your notes um and in your practice, uh, which is which um because they all carry different uh liabilities. Back to your your basic dental sales, but I did say 99.9 is probably fine. That's where you're delivering normal dental treatments, you're treating damaged teeth, gums, you're you're using the aligners to kind of straighten teeth. So long as those treatments are treating a disease and the treatment is for a medical purpose and for medical redental, but there is a therapeutic purpose there, uh that's exempt from VAT. There's no change in that. Where there is a slight change is uh in your record because uh HMR TC are look they've looked at the aesthetic sector. Let's let's take that as an extreme example, but they've looked at the aesthetic sector uh really since 2007, probably a bit before that as well, but it's definitely since 2007. And it's taken until last year to actually get a court ruling that that carried force of law, it went to the upper tier tribunal to get a definition of what was medical care and what uh was uh required to evidence that medical care to get you back into the exemption. Because bear in mind, as we're talking about VAT, it's not real life. It's uh the exemption might be for medical care, but HMRC get to put the parameters on it as what they qualify as medical and what they don't. And I say they've been fighting in the aesthetic sector for a great number of years. The court has ruled that uh if there is a diagnosis, and for diagnosis, it doesn't need to be a specific disease, it can be a differential diagnosis, it can be a prevention of a future disease. All of those are in the diagnosis definition. But you have to have written it down to say what it is, and you have to then explain that the treatment you're giving them is for the bet the benefit of improving or dealing with that condition or threat of a condition. Because basically, if it's not written down, it didn't happen. Because the basic rule of VET is it's standard rated unless you can prove it's in one of the exemption or zero rate schedules.

Vanessa, 9m 48s:

And that's the important point, is it, Veronica? Is that people uh quite often just assume that because we are talking about dental treatments, it's exempt regardless. But if it's not documented correctly and appropriately, you're running the risk that HMRC will make a different determination.

Veronica, 10m 5s:

Exactly, exactly. And the problem is that the legislation that applies to you is the same legislation that applies to nurses, doctors, dentists in any other medical sphere. They have you have to be registered on, and there's a list of medical registers, so doctors, dentists, nurses, they're they're all there. You have to be working within uh the qualifications, the training, and the parameters set by your regulator. So this is one from I don't know how many dentists who work either in their own practice or in someone else's to deliver aesthetic work um to patients. And HMRC are challenging the dentists because they're saying, but dentists are not regulated to give aesthetic treatments. If they're not regulated, you failed that first test, you're not regulated for aesthetics. Therefore, it doesn't matter if there's actually medical care going on, you've got to pass both tests to be in the exemption. If you fail one, you fail both. So it's really important to understand what you're actually qualified and regulated to do. And anything you do that's outside of that is not exempt, is standard rated, unless in doing it you're regulated by somebody who is you're sorry, you're supervised by someone who is regulated. So there's a number of ways the threads can take you down and you'll be okay, but you've got to demonstrate the threads are there and that they're all connected.

Vanessa, 11m 29s:

Um it's all about the documentation, isn't it? It's all about the patient notes. And I've spoken to a few clinical leads in surgeries to sort of just try and ascertain, you know, how confident we would be about the patient notes being, you know, suitable for this sort of test. And I think it's wholeheartedly agreed they wouldn't be. Yeah. Would, would, would or wouldn't, wouldn't be currently. Yeah, yeah. So I mean, James, you you you're you know, you're a former practicing dentist. I mean, you know, how how great would your patient notes have been?

Dr James, 11m 59s:

Oh do you do you mean well broadly speaking, I would have hoped they're all right.

Vanessa, 12m 4s:

It would have been great, wouldn't they? It would have been great.

Dr James, 12m 8s:

Specifically VAT. Um personal, personal attack, therefore Vanessa uh yeah, well I'm just thinking you pointed to you mean with regards to VAT, um absolutely categorically not uh would I have ever said in any notes any sort of disclaimer, you know, that this is purely for medical purposes or health-related purposes or anything like that. It's it's I it would have been assumed or implicit, but now it needs to be explicit, right? Yeah.

Veronica, 12m 37s:

Well, the reason is, I mean, the one HMRC keeps keep going on, and they do it in the in the um outside the dental sector per se, but teeth whitening. Most officers I meet immediately leak to teeth whitening as a cosmetic treatment. I imagine there are certainly circumstances it will be a cosmetic treatment. But the reason that HMRC's guidance to date, and it's been agreed with the BDC, is that uh cosmetic the tooth whitening can be uh exempt if it's part uh of a medical uh treatment. So how do you differentiate? Because HMRC don't speak dentistry, they don't speak medicine. I've had delightful conversations with them. I don't speak it either, but I've got a bit more fluent than they are. So they're looking at notes. If they don't understand the notes and don't see what what should leap out to them in plain English, they just say, Well, you have approved it as you're in the exemption and immediately standard rate. If the notes say that the teeth whitening and the presentation list was the agreement that was there before, the teeth whitening has been given for oral hygiene, for protecting the health of the gums and the teeth, immediately you've got, well, uh that's preventative of a future disease. Therefore, uh that then becomes uh exempt is it you've proven the exemption. Up till now you've not really had the necess it's not really necessary for you to do that because you write your notes uh A to make sure you don't get sued if it goes wrong, let's be honest. Also to pass the peer reviews that you're required to take. But those peer reviews are carried out by other dentists who are trained the way you are, who understands yes, okay, they've come in, you've got all your e-symbols and all your signs all mean this condition, and that's the right treatment. You've passed your peer review. HMRC come in and go, where does it say that? So you it it is about to an extent writing the notes for VAT rather than for medicine or for dental uh efficacy, but it has to be written down, and it's uh it's not just the dental sector that's being attacked here, I would say. Um it's it's just starting to dribble into dentistry. It's uh see, I've been doing this for 15 years now, um just in this sector. I've been doing VAT for a lot longer, sadly, but um 15 years in this sector, and uh I've had plastic surgeons for years always saying to me, all this stuff going on with the nurses and the doctors and aesthetics, nothing to do with me. I I do surgery. The bulk of the clients coming to me now for VAT review because HMRC are all over them are plastic surgeons. Because it's the same test. It doesn't matter where you sit in this sector, um, whether you're in dentistry, whether you're in surgery, whether you're in you know, even GP services are are getting looked at where they're not if they're private GP services. It's the test is are you on a medical register doing what you're regulated to do? And is it for a medical purpose? And that's it, uh it's as simple as that. Uh the test in Illuminate specified, as I say, a diagnosis can be an actual diagnosis. So a patient suffers from Bruxes and that. So you're going to do the dental work to reduce the masseter, you're going to give the Botox injection to take that down to relieve the pain. All these things come together. If you're put down a symptom cluster, HMRC don't understand symptom clusters. I can't Google that. And trust me, the god of Google is is uh HMRC's go-to. So uh if you write Brooksism, they can look it up. All right, so then in that sense the treatment would be as follows. That's easy. But you're assuming they're going to take the time to look it up. So you you need to think about your notes. Are you capturing it? It does not need to be war and peace, it just needs to state what is the condition, what is the purpose of doing it. And if you've got the medical and therapeutic purpose, uh then you're in the exemption. So it's it's sort of being aware of that in themselves, you might not have enough cosmetic treatments to get to require you to register for that. But you need to identify if you have any so that you know how much. You might not have enough over-the-counter sales to require you to register in isolation, but you now need to add it to those cosmetic treatments you've identified. You might only have occasional purchases from overseas, that now needs to get added back in as well. And bearing in mind the VAT registration threshold is measured on a rolling 12-month basis. You can't wait till the the year end to measure it because you've got at every point up until the last month, you've got a bit of the year before. So you're gonna have to monitor this on a on a monthly basis as well.

Dr James, 17m 6s:

I understood. And you know what? There there is, and this is one of these podcasts that's like a rabbit hole almost. There's more and more to it, you know. And let's absolutely get into the chargeback thing, because that's very important. Just to summarize what you were previously saying about the treatment plans, because I like to make these really tangible for everybody who's listening. So if I've understood this correctly, because the way a diagonal the way a dentist would normally do their notes, or the way they should normally do their notes, is they have to have a diagnosis. No diagnosis, no treatment, right? Like you have to have a diagnosis, right, uh before you perform any treatment. So the diagnosis is just to make 100% certain that you are doing that, which you should be anyway, clearly stay in your treatment, but then also to ensure that HMRC understand that we're providing this for uh, well, not for aesthetic or cosmetic purposes. We should also say that the purpose of the treatment is that is that is that a good way to summarize things? Yeah. Yes. You can see what the treatment is um to relieve pathogenic tooth wear um by um alleviate, you know, by you know weakening the buck the the massacre, I suppose, in that example that you said with regards to bruxism. That could be an example. UK dentists, dentists who invest now has an official platform where you can learn about finance and obtain UK compliant verifiable CBD at the same time. The only platform that exists on which you can do both. The Smart Money Members Club has hundreds of hours of mini courses, webinar series, and live day recordings on all things finance slash tax efficiency for UK dentists. This includes complete courses on how tax works for UK dentists, finance so that you can invest and grow your own money, business so you can improve your profitability as an associate or principal, and for those out there that want it, there's also a mini course and how you can responsibly enter the crypto space using measured amounts of capital. I've gathered this content from the best of the best I could find in each respective area so that you know that this is how people at the forefront of each field advise their clients. The Smart Money Members Club also contains discounts on common things that UK dentists need to pay for on a regular basis. This includes a whopping 10% discount on dental indemnity, the offer to beat your income protection deal no matter what you're paying, and for the principals out there, 5% discount on lap bills and 10% discount on practice insurance. These are designed to offer hundreds, if not thousands, in annual savings. The purpose of this members club is to not only boost your monthly income but also manage your outgoings as much as possible and therefore create more profit to celebrate the launch of the Smart Money Members Club. And given that the CPD deadline is coming up soon, I've decided to offer the first month of this platform entirely for free. This offer will end in the coming weeks as soon as the current CPD cycle is up. To collect your CPD for this podcast episode using the Smart Money Members Club, feel free to use the link in the description of this podcast.

Veronica, 20m 8s:

It's just got to it's it's it's what I call the of course stuff. Of course that's why you're doing it, but you have to write it down. Sure. So it's we're not I'm not asking you to reinvent this, loops it differently. It's actually just doing what you do, but write down, but of course that's what it is. Um so that from HMRC come out, it's there, they can't argue with you.

Dr James, 20m 28s:

Okay. There would there was something else relevant, um, which we were talking about off camera, which is how this pans out with regards to does this apply just prospectively from this case study and this case law change, you know, this this uh prominent law case that was about a year ago, um, or is it retrospective? Should we talk about that now or should we talk about chargebacks first?

Veronica, 20m 54s:

Well, we'll do the registration bit and then we'll deal with that now. Let's get the bad news out of the way. Um if you are a practice who's that which is already registered for whatever reason, and you you've now gone back and revisited, say it's your dental treatments and found there's some now some cosmetic ones under the current test. HMRC can only assess you for four years retrospectively. Um to go further back, they can go back 20 years if they thought there was some fraudulent intent, but they've got to prove that. And it by that I mean somebody has come out, done a VAT review, and told you specifically, whether it be HMRC or another advisor, that something you do is definitely standard rated and you've then ignored it, um that's deliberate. Anything else is a mistake. Um so so if you've made mistakes an error, it's a four year window. If you're not VAT register and you'd never have been, HMRC can go all the way back to the first point in your trading history that you exceeded the VAT registration threshold. And I say the 90,000 has only been in for a few years recently, it was 85 for about 10 years before that, and then it was by uh amounts smaller um in earlier years. So you need to work it back to here's my turnover, I've identified taxable turnover, and then look at it in all the preceding years because there hasn't been a change in the law. Uh the case slow illuminate um was the case um that was heard last year. It uh was a decision which properly interpreted the law because no, there was no legal definition of medical care up until then in the UK. So that that was a very specific point to to define what medical care meant. It didn't change the law, it still always said medical care, we just didn't know what it meant. So that means it's got retrospection. So most of you will not be VAT registered, therefore, I think you've got the risk of it could be retrospective, but you're gonna have to look at your figures and going back to work out how far back that could go.

Dr James, 22m 54s:

Okay, so the important thing to restate is that the law hasn't actually changed, it's just how they're applying it or viewing it. So therefore, this could potentially be retrospective, not to not the scaremonger amongst people who are out there, because obviously the implications for that could be absolutely massive. Um not just for purely principles, but maybe even the odd associate as well, would you say? Is that fair? Yeah.

Vanessa, 23m 19s:

Yeah. I mean, in theory it could, yeah. I mean, uh associates are going to be effective because they're gonna be the ones that you want to make the accurate record keeping for patients. So, you know, if anything, that's the minimum they need to take away from this, is that you know, their their patient notes have got to be fit for every purpose, not just the clinical one.

Dr James, 23m 38s:

Yeah. Um I'm just kind of playing that through in my head. So the liability would lie with both, really, I guess. Yeah.

Veronica, 23m 47s:

Yeah, actually. There is another case called Maine Pay, where it was basically an umbrella recruitment company who held itself out as a supplier of medical services, supplying doctors and surgeons to the NHS. HMRC came back and the court ruled it went all the way to the Court of Appeal, so right as far as it was reasonable to go. And they ruled that no, as that company did not have medical indemnity insurance, didn't know where the staff were going to be placed, that they were actually just a placement, uh staff company, and their supplies were subject to that. Now HMRC have rolled that back and said, well, you don't always need an umbrella company like MainPay to be doing that for you. Doctors and surgeons can do it on their own, asking dentists. You decide on your own, you're going to work for somebody else. Well, are you providing yourself a staff or are you providing uh dental services or other medical services to that second business? Staff has got that on it. Medical services and dental services will don't subject to the test on cosmetic. So it's another area that HMRC are all over in the medical market at the moment, because the the first stock tends to be they go for this main pay if they think there's contracts for staff coming in. Virtually everyone that's come to, in fact, all of the ones that have come to us to date, we've got HMRC to back off. They're wrong. But we've had to prove it through contracts, terms, or conditions of the paperwork that's behind it. So you just need to be careful when you're doing something outside of what I'd call the norm, so your core business of dental services, you're fine, you're comfortably, I would say, within the exemption. But it's the outliers, it's when you start to do something a bit different and you get a bit more entrepreneurial. And I mean, I go into my my own dentist, I'll not say where, and I'm sitting in reception and there's a video playing in the corner, and it's playing cosmetic treatments, and it's blatantly cosmetic treatments. There's nothing that says that's part of the dental treatment, it's just saying, Have you thought about this? Teeth whitening, straightening. That you know, HMRC officers are dental patients, and this they're they're coming and they see it. Um their mommies are, their grannies are, but whatever. They're seeing this, this is their window to your world. So you need to be just careful how you advertise and hold yourself out. Be very clear what it is you're doing. We're not proposing this as VAT planning. You've got a business, you run it for a certain reason, but be clear what the VAT liability is, because that affects your cash flow, um, your profit, and your take home pay.

Dr James, 26m 20s:

Awesome. And you know what? Now it seems like a good on the topic of advertising, now it seems like a good point to segue into chargebacks of which advertising can be a component, right? Depending on what platform you're using.

Veronica, 26m 35s:

Yes. Well, it's reverse charge, we've called it, it was always introduced as an anti-competition piece of legislation. And it was brought in when we were part of the EU that said if you bought services in another country where they're not supplying services in country, they don't have to charge you that. Well, in that case, when would you whoever buy advertising, legal services, accountancy services in your own country? It's going to be 20% cheaper to buy it somewhere else. So that legislation foresaw all of that and said, no, if you buy it in from a country outside your own, you have to treat it as if you'd bought it in your own country. Now they don't want the provider to have to do that, so it's the recipient that does it. And it's this reverse charge to them. So they create their own charge. They got the bill, they account for VAT at 20% on top of that on their VAT return, and then they recover the VAT if they're fully taxable. They don't recover any of it if they're not taxable. And it's not just dentists that get caught by this. I I had to give the sad news to an insurance company who's that's never been registered in about 300 years, but they had to VAT register because they were exactly that. They were buying in advertising services and they had to register just for the advertising services, and then they couldn't recover it because their services were exempt insurance services. That's the problem you're going to have. If you only buy in 50,000 a year, nobody cares because you're under the threshold. If you're over that, you have to register, and then you can't recover it unless you're making other taxable supplies that you're obviously registered for. So it's it's just one to watch, and it's one HMRC again are picking up. They go through flavours of the month, and this is the current flavour of the month is for their charge.

Vanessa, 28m 20s:

It's fun that's one other area, Veronica, I've seen is um with the increase in employers' NIC is some of the larger dental um groups looking to move some sort of um shared services uh offshore. So you know, head office functions offshore, that sort of thing. So if they're moving outside of the UK and being charged back, then that's also added to the reverse charge, isn't it?

Veronica, 28m 42s:

Yes, it is. I mean, you just got to be really careful. Any services you take outside, you're gonna have to go back. Check with the VAT specialists, because not all of them are subject to VAT, but most of them are. But go and check. Um, if it's goods, it's easy because they stop you at customs and charge you VAT anyway, or you know, you get charged by the supplier. Services are less likely to get picked up just because they're they're ethereal. But you know they're coming in, and HMRC, if they do come out, just because you're VAT registered doesn't mean you don't get a VAT visit. How do you say that as well? HMRC are allowed to come out to check that you should not be VAT registered. Um, and that's what they're currently doing in the aesthetic sector. All these businesses are not VAT registered, HMRC are coming out to say, prove to us that you're entitled not to be registered. Just because you're not now doesn't mean you won't get a VAT visit. Um and at that point, uh they go through all of your records. One thing I would say if HMRC do turn up, um if it was a pub, a club, a joinery business, whatever, they could come out and just say, give me a download of your last four years' records in TD. They cannot do that with you. They can download your cash book, uh sales invoices, um, purchase invoices, but they cannot look at your medical records of your patients. You they can ask for request a certain period, but you have to redact uh the personal details, you know, patient confidentiality. It's you don't want to get you'll you'll be out of business if you do that anyway. But HMRC sometimes forget that they're not required to ask, and if you give them to them, they've got them. Um I've had a recent discussion with a VAT officer who had to point out that taking a photograph of our medical record on his phone was illegal, and I wanted his assurance that had been deleted and from all sources, which he promptly did. They're not allowed to get those, um, but they are allowed to see the medical records so long as you've redacted them. So names, addresses, phone numbers, um, anything that would NIC num I numbers, anything at all that would identify them, you take that off. So all they get is patient 53 with toothache, and then what the treatment says, that's fine, but they don't get free reign on what you get. So bear that in mind. If an officer comes up at your door demanding to see everything, put them in touch with your accountant or your local VAT advisor and tell them to come back, he doesn't get to see them.

Dr James, 31m 1s:

That's that's some good know-how or insight right there, because who knows, maybe some people uh can find themselves in that position. And just to reiterate, I mean, I think one thing that's really important to highlight, and um I kind of remember if we actually said this during the podcast or off-camera, but I'm gonna say it again for the benefit of the dentist. If your treatment plant, and correct me if I'm wrong, guys, this is what this is one of my big takeaways, and certainly should be one of the big takeaways for the dentist in the audience, in my opinion. If your treatment is fully aesthetic or cosmetic, okay, then obviously it's gonna be liable for VAT, and we shouldn't seek to hide that. If your treatment is fully for health purposes, then it won't be liable to VAT. However, if it's part and part, then I believe it's still treated uh as exempt from VAT, correct? Because there's the health component. Have I got that right?

Veronica, 31m 49s:

You are right. If if you can have obviously two services, one exempt, one taxable, but it's the principal purpose that determines the VAT liability. So that's all if your principal purpose is still the health care of a condition and you give a cosmetic treatment that's ancillary to that, it's the exempt first principal service that determines the VAT liability. But equally, if you were giving a cosmetic treatment, and while you were doing that, you spotted there might be a medical part to it. You've now reversed, and the principal supply then is cosmetic, and the bit that was exempt is now subject to that as well. Oh so you need to it's also useful if you've got these multiple supplies to have in your notes which is the principal supply, what's the first one you're treating, and what's the secondary one? And the first one will determine the bat liability.

Dr James, 32m 45s:

I'm so glad I asked because that previously to me asking that, that was my understanding. And it wasn't a million miles away, but there's a little bit of a caveat.

Veronica, 32m 53s:

No, no, yeah, yeah. You were there, but it's just to be very clear that you also need to because HMRC, if they see both, well then well, which which one's the main one? You've not made it clear. You've got a cosmetic treatment, therefore it's all cosmetic. You can see that it's back to you've got to prove the exemption. But if you've got you've already proved the exemption on the main supply and you see this is the principal supply, uh you've made it clear and it's in writing, it's a contemporaneous note that says at that point you were very clear. Because uh, in all of this, uh it's the dentist's opinion that counts. You might have a patient that comes into you wanting a cosmetic treatment. If that uh, in your opinion, having carried out the the pre-treatment check, you've identified a medical condition or a dental condition that needs to be treated that will give the same cosmetic outcome, but you've got that you are treating the medical condition, then that goes back into exemption. So it doesn't matter what the patient wants or thinks they're getting, it's what you have written, you what you're proposing to do and what you've written down.

Dr James, 34m 0s:

Guys, thank you so much. This is absolutely gold us, and I think it is safe to say that we've shed a lot of light on the VAT predicament or scenario uh that's kind of ongoing or unfolding, I suppose, really, in dentistry is super valuable. As I was saying um before we started this podcast, this is probably something that we could do like three hours worth of content on if we if we wanted to, all the ins and outs and case studies and everything along those lines. So I think the information that we've given today is at the perfect level of detail. And if we were to make that into actionable takeaway bullet points for the dentists that are listening today, how would we be best summarising that? What's your thoughts on that one, Vanessa?

Vanessa, 34m 41s:

I think there's two areas of homework here for the practice owners and associates alike. I think on the financial housekeeping, you need to look at your systems and make sure you're setting up some way of tracking that 12-month window on potential vatical supplies. Make sure you understand where they might be coming from, whether it's um, you know, uh cosmetic treatment, whether it's reverse charge, whether it's um reception sales. And then the other side of it is the clinical leads. They need to now do some uh inspection of the patient notes and make sure they understand where they might be um not quite meeting those those two areas uh that Veronica's talked about today.

Dr James, 35m 20s:

Lovely jobly. Thank you so much, guys. And just out of curiosity, if anyone listening to the podcast wants to reach out to either of you off the back of anything that's said today, where would they be best off finding you?

Vanessa, 35m 30s:

Azet's website has all our contact details.

Dr James, 35m 33s:

Same for you, Veronica.

Veronica, 35m 35s:

Yeah, yeah, just look, Google, go onto the website and search for Veronica Donnelly. You'll find me. There's only one of them.

Dr James, 35m 42s:

Lovely, lovely, lovely, lovely. And important to mention that you can, of course, find Vanessa on the Dennis Hoonfest Facebook group. Feel free to search the members. Of course, yeah. Vanessa Popel, and you'll be able to get in touch. Thank you so much, everybody, for great podcast. Look forward to the next one already.