Braced for Exemption

In the case of Align Technology Switzerland GmbH & Anor [2025] TC 09499, the First Tier Tribunal (FTT) deliberated on whether removable orthodontic aligners qualify as dental prostheses for VAT exemption.  The FTT ruled in favour of Align, determining that their aligners met the definition of dental prostheses, thus exempting them from VAT.

Align manufactured custom aligners used by dentists to reposition teeth.  Patients’ mouths were scanned using advanced technology, and Align produced bespoke aligners, which dentists monitored throughout treatment.  Align treated its supplies as VAT-exempt, but HMRC contended they should be subject to the standard rate, which Align appealed.

VAT exemption applies to dental prostheses supplied by registered dentists, dental care professionals, or dental technicians.  Align employed UK-registered dental professionals but were not dentists themselves. The case hinged on whether aligners qualified as prostheses under VATA 1994, Sch. 9, Grp. 7, items 2 and 2A.  The FTT analysed the everyday meaning of "prosthesis," considering dictionary definitions and specialist medical references. While some definitions focused on replacements for missing body parts, others included devices that enhanced function, such as orthodontic appliances. Given its role in dental treatment, the FTT concluded aligners fell within the meaning of dental prostheses.  The purpose of the exemption is to ensure essential healthcare products remain accessible without VAT costs. The FTT recognised that aligners, though sometimes worn for cosmetic improvements, primarily address functional dental issues, aligning with the exemption’s intent. HMRC’s stricter interpretation was rejected.

HMRC cited VAT committee documents suggesting that dental prostheses under the principal VAT directive excluded orthodontic appliances.  However, the FTT dismissed these guidelines, noting they lacked unanimous agreement and did not offer thorough analysis.

This case reinforces the importance of interpreting VAT exemptions within the broader healthcare context and highlights the ongoing legal scrutiny of tax treatment for medical supplies.  Given this is only FTT, it is not binding on others and it will be interesting to see if HMRC appeal.