Healthy call

Kevin Hall ponders on whether a recent call for VAT to be removed from bras on health grounds is justified.

Bras are subject to VAT at the standard rate along with all clothing but, on 16 April 2024, calls were made by the Society of Radiographers for VAT to be removed from bras on health grounds.

This debate has already become heated and it is important to determine the facts. The radiographers’ call is in fact well- placed and in this article, we will understand why it is phrased as it is. We will also consider whether there are other broader approaches and if these approaches are effective for customers.

What was said?

The Society of Radiographers gave carefully worded grounds to justify the removal of VAT: "Those who are wearing a bra size D or above often get backaches, aching shoulders and neck pain, because of the weight of their breasts.

"Wearing a good-quality, well-fitted bra could alleviate some of these issues, and reduce time off sick for musculoskeletal issues.

"The imposition of VAT on bras disproportionately affects women. Taxing bras could be considered discriminatory as per the Equality Act 2010."

Retailer Bravissimo extended this, saying: "Our own research conducted earlier this year told us that 11% of women experience health issues like back, neck and shoulder pain because of what they perceive to be their larger busts.

"We also know that having larger breasts has a significant impact on levels of physical activity, which in itself has long term health implications.

"One in five younger women (under 25) feel limited in how physically active they can be because of their breasts.

"Fifteen per cent of younger women (under 25) have actually stopped participating in sport because of their breasts."

VAT legislation

The relevant legislation in VATA 1994, s 4(1) taxes all supplies: "VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him."

The standard rate of VAT is currently 20% and the only way to avoid a full VAT charge on a supply by a retailer to their customer is for the supply to be listed in one of the schedules for exemption, zero rate or reduce rate.

These schedules do not include bras specifically.

Health reasons

Currently, bras only fall within one of these schedules accidentally, where the bra has another purpose which is specified in one of the schedules. For example, the sale of a bra will be zero rated if it falls in the zero-rating schedule for ‘drugs, medicines, aids for the disabled, etc’ per VATA 1994, Sch 8 Gp 12 specifically item 2: 'The supply to a disabled person for domestic or his personal use … of –

(a) medical or surgical appliances designed solely for the relief of a severe abnormality or severe injury

…

(h) parts and accessories designed solely for use in or with goods described in paragraphs (a) to (g) above.'

Note (4) states 'item 2 … shall be deemed to include … clothing.'

There was even a Supreme Court case in 2016 regarding bras falling within this category – Amoena (UK) Ltd v CRC [2016] STC 1884. The taxpayer said that a mastectomy bra was an accessory to an artificial breast form and therefore import duty was nil on the grounds that the mastectomy bra helped ‘compensate for the defect or disability’ after a mastectomy. HMRC disagreed but the judges found for the taxpayer and HMRC now specifically includes mastectomy bras within zero rating in VAT Relief for Disabled People Manual at VRDP15000.

But that is all. Only the tiny number of bras which are ‘disability aids’ can be zero rated for VAT purposes, and that had to be fought for. Even then, import duty itself has since been re-imposed on mastectomy bras (see Rollercoaster battle over mastectomy bras).

The reasoning behind the radiographers’ careful wording can now be understood, focusing specifically on health.

For this approach to succeed, however, HMRC would have to accept that normal bras are ‘medical or surgical appliances designed solely for the relief of a severe abnormality or severe injury’. While the risk of injury has been made clear, the concern is that a normal bra simply cannot be described this way. The mastectomy bra is zero rated because it holds in place a ‘breast form’ and it is this which compensates for a severe injury. A normal bra does not do this.

Other health reasons

There are also VAT debates in other areas of health, such as cosmetic surgery. Is cosmetic surgery standard rated or does it fall under the exemption for health?

HMRC’s approach is stated in section 4.4 of VAT Notice 701/57:

'We will generally accept that cosmetic services are exempt where they’re undertaken as an element of a health care treatment programme.

‘Where services are undertaken purely for cosmetic reasons, they will be standard rated.’

Even if bras were somehow to be part of the medical care service to secure a health exemption, as with cosmetic surgery, the bras would have to be ‘an element of a health care treatment programme’.

The concern is that bras will neither be an integral element of an exempt supply of medical care, nor part of a treatment programme.

Change the law

If bras cannot have VAT removed under existing legislation, the VAT legislation itself would have to be changed to specify the supply of bras within one of the schedules to the VATA 1994 which reduces or removes the VAT charge.

The legislation itself does not provide any principles on which categories are selected and it is therefore the law givers’ intention to which one must look, namely parliament.

The types of supply included within these schedules appear generally to be socially motivated, for example food, utilities, health, charities, property and housing, education, and finance. It would therefore be important to present to parliament a socially motivated reason to add bras to one of the schedules.

The radiographers have worded their statement carefully. It raises the social issues of discrimination against women in addition to the health impact on women of not wearing a bra. The statement also sets a practical way to define the supplies from which VAT should be removed – size D and above.

Parliament has been persuaded to change VAT law before with respect of women’s products. Women’s sanitary products were added as Gp 19 to Sch 8 with effect from 1 January 2021, immediately upon Brexit. The definition of this was clarified in the legislation by the addition of Note (1)(d) to include period underwear with effect from 1 January 2024.

It is certainly an area where parliament is now listening, and the radiographers’ call has been worded well.

Should there be VAT on basic clothing at all?

This all raises an additional issue. If we are asking HMRC to look at removing VAT from particular supplies for socially motivated reasons, including basics in our society such as food, housing, utilities and so forth, should this list not also include clothing?

This opens up a difficult topic. Clothing is currently zero rated only for ‘young children’ and some protective boots and helmets (VATA 1994, Sch 8 Gp 16).

Food and drink are zero rated, but the zero-rating is withheld from many items. Food supplied in catering – restaurants and hot takeaways – is not included within the zero rating, nor are ice cream, confectionary, chocolate-covered biscuits, alcoholic drinks, juices, crisps and so on. Perhaps a similar distinction should be considered for clothing.

Currently a high fashion garment for a young child is zero rated, but even basic clothing for adults is subject to VAT. This includes basic bras: that is, basic bras in a larger size which are important for health reasons and basic bras in all other sizes too. As a social necessity, perhaps basic clothing should be zero rated, with all other clothing – fashion or non-essential items – subject to VAT.

This would be difficult to achieve in practice, but perhaps it is simply the right thing to do.

Does the removal of VAT reduce prices?

These considerations all operate under the assumption which is intrinsic in the VAT legislation itself. The very existence of exemption, zero rates and reduced rates appears to assume that they will reduce the retail price of supplies in areas where that is socially desirable – such as food, education, health and housing.

In 2015, the International Monetary Fund (IMF) issued a working paper Estimating VAT pass through which cast doubt on this (tinyurl.com/imfevpt). The authors stated: ‘For changes in the standard rate, for instance, final pass through is about 100%; for reduced rates it is significantly less, at around 30%; and for reclassifications it is essentially zero.’

Only where a change in the overall rate of VAT was implemented was there a comparable increase or decrease in the price charged to the consumer. Where a specific item was moved from one rate of VAT to another (as is suggested with size D+ bras and as has happened with women’s sanitary products), the IMF found that there was no change to the retail price. The customer pays the same. This appears to benefit manufacturers and retailers rather than the consumer.

This was seen in practice when VAT was removed from women’s sanitary products. The think tank Tax Policy Associates issued a report on 10 November 2022 (tinyurl.com/ tpavattt10nov) which concluded: ‘Consumers did not in fact get the full benefit of the abolition of the 5% VAT “tampon tax”. At most, tampon prices were cut by around 1%, with the remaining 80% of the benefit retained by retailers.’

These two reports suggest that a large-scale change (perhaps clothing as an entire market) might benefit the consumer, rather than a specific change in respect of one product only (bras). However, it is for economists to determine when a change in VAT would benefit consumers and when it would not have the desired effect.

Conclusion

The call by radiographers to remove VAT from larger bras sizes is grounded in good reasons, which are further extended by Bravissimo. It is unlikely that bras will generally be zero rated or exempt under existing VAT legislation and therefore the call is aimed at parliament to adjust the legislation.

Parliament appears to have drafted the VAT legislation to remove VAT from certain supplies for socially motivated reasons, such as food, housing, education, health and so on. In addition, parliament has been persuaded to change the VAT legislation in recent years so as not to tax women’s products.

In aiming at persuading parliament, the radiographers’ statement is powerful. It highlights health reasons, women’s needs and flags discrimination, as well as including a simple threshold to include in the legislation: D-cup and above.

However, there are concerns that this change would not benefit consumers, as stated in the aforementioned IMF report and confirmed by the Tax Policy Associates when VAT was removed from women’s sanitary products in 2021.

This challenges a core principle of the VAT system which appears to assume that removing VAT will result in reduced prices for consumers. If decisions are made within this framework, there are good reasons to remove VAT from larger bras. If, however, one accepts that removing the standard rate of VAT from a specific product does not significantly benefit the consumer, only a large-scale change will be effective.

It is interesting to consider that clothing is as much a social necessity as housing, education and health, so perhaps basic clothing should be zero rated for all, with all non-basic continuing to be standard rated. That might be difficult to define in law and overall, UK tax revenues will have to be balanced, but if the economists consider that VAT reductions would only be passed on to consumers with large-scale changes, perhaps it is the right thing to do. 

This article was original published in Taxation.

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