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HMRC internal manual

VAT Taxable Person Manual

HM Revenue & Customs
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Particular trades: Hairdressing: How to decide who is making the supply

There have been many tribunal cases on the subject of hairdressing. However, these do not follow any discernible trend; different supply situations have been found when the facts of the respective cases do not materially differ. We do not therefore base our approach upon tribunal or High Court decisions. If traders attempt to do so, you should advise that a number of tribunals have produced conflicting results, and you are therefore considering the present case purely on its own merits.

Although there have been several decisions, one quoted by businesses is MacHenrys (Hairdressers) Ltd (LON/89/1152), in which HMRClost both the original tribunal case and its subsequent appeal to the High Court. This case considered a number of aspects of the business relationship between salon and stylist, and concluded that these pointed to a supply of hairdressing from self-employed stylist direct to the customer. We have taken on board these factors and have built them into the guidelines which we have agreed with the National Hairdressers Federation.

However, the decision in MacHenrys does not explicitly demonstrate that stylists, merely by virtue of becoming self-employed, make their supplies direct to the customer. This was confirmed in the tribunal case of S Taylor (Machine Tools) Ltd (LON/92/860A) (see VTAXPER68900).

Instead, we use the following approach to determine who has supplied the hairdressing services to the customers.

  • Firstly, consider whether the stylists are employees of the salon - you will find guidance on this at VTAXPER68800.
  • Then, and only if they are self-employed, consider to whom the stylists supply their services. You will find guidance on this at VTAXPER68900.
  • Finally, and only if you are satisfied that the supply of hairdressing services is direct from the stylists to the customers, consider the liability of the supply of services from the salon to the stylists. You will find further guidance on this in Section 5 of V1-8 Land and property.