The recent case of Mark Glenn Ltd v HMRC [2026] UKUT 34 (TCC) highlights the difficulties that continue to arise in applying the zero rate of value added tax (“VAT”) and the strict approach HMRC often takes to such issues. It is also a reminder that such disputes often turn on issues that may seem abstract and almost philosophical, but which have tangible, real-world effects on both businesses and end-users. Partner Anastasia Nourescu and associate barrister Guy Bud review the decision and consider its implications.

VAT treatment of supplies to disabled persons

Zero-rating is a particularly important issue for businesses operating in medical or medical-adjacent sectors. Group 12 of Schedule 8 to the Value Added Tax 1994, which provides for zero-rating supplies of “drugs, medicines, [and] aids for the disabled”, is one of the lengthiest and most complex areas in the regime. It complements the exempt treatment for more clinical kinds of supplies relating to “health and welfare”, which are dealt with separately at Group 7 of Schedule 9.

“The supply to a disabled person of services of adapting goods to suit his condition” is expressly zero-rated under Item 3 of Group 12. The notes add that a person who is “chronically sick or disabled” is a “disabled person”, but neither term is entirely clear, which has caused difficulties over the years for various conditions, including dyslexia and asthma.

HMRC’s longstanding interpretation is set out in VAT Notice 371/7 “Reliefs from VAT for disabled and older people”:

“A person is ‘chronically sick or disabled’ if they are a person with a:

• physical or mental impairment which has a long-term and substantial adverse effect on their ability to carry out everyday activities
• condition which the medical profession treats as a chronic sickness, such as diabetes

It does not include an elderly person who is not disabled or chronically sick or any person who’s only temporarily disabled or incapacitated, such as with a broken limb.”

Alopecia (hair loss) can result from a number of causes including various medical conditions. Its effects can be debilitating, especially for women, for whom it is rarer, and affect a person’s sense of self, their mental health and day-to-day life. For this reason, the charity Alopecia UK has noted that HMRC has tended to take a permissive approach towards the provision of wigs and similar hair products.

HMRC nonetheless sought to recover unpaid VAT from one provider (Mark Glenn Ltd) on supplies of its specialist wigs for women with hair loss.

Alopecia as disability?

The key issue before the First-tier Tribunal (Tax Chamber) (“FTT”) in August 2024 was the meaning of “disability” and, specifically, whether alopecia in women could be said to meet the statutory definition. The FTT distinguished, above all, between hair loss and the cause of hair loss.

Among other things, the FTT referred to the definition of disability in the Equality Act 2010 (section 6), which, among other things, refers to “an impairment [having] a substantial and long-term adverse effect on [the person’s] ability to carry out normal day-to-day activities”. Certain diseases (eg, cancer) expressly constitute a disability, and it was common ground between the parties that certain treatments for these could cause hair loss.

Nonetheless, the FTT concluded that hair loss in women was not an “impairment” and held that, even if this was not the case, it did not have “a long-term and substantial adverse effect on the ability of women to carry out everyday activities”. Accordingly, zero-rating was denied.

Upper Tribunal remakes the decision

The taxpayer appealed the FTT’s decision to the Upper Tribunal (Tax and Chancery Chamber) (“UT”) on a number of grounds, including the FTT’s “failure to give reasons” for its decision. The taxpayer contended that the FTT had not explained why it had rejected the taxpayer’s submission that baldness in women was capable of constituting a disability in its own right. The UT agreed with the taxpayer, overturned the FTT’s decision and remade it rather than remitting the case back to the FTT.

The taxpayer based its argument that female baldness was specific enough to constitute a disability because of its relative rarity, cultural sensitivity and potentially debilitating personal effects. The UT was clearly sympathetic, finding that “severe hair loss in women” did constitute an “impairment” with an impact on carrying out everyday activities.

It emphasised: “This is not because hair loss physically prevents participation in such activities, but because of the distress that would ordinarily be experienced by a woman with severe hair loss if no steps were taken to conceal it. That distress arises from the cultural significance of hair to female identity, societal expectations regarding appearance, and the different standards applied to women.”

The UT specifically emphasised that its “acceptance of the evidence and judicial notice on these matters does not imply any value judgment that the social reality should remain unchallenged or that it is immutable. It may change over time.” It was simply based on the evidence itself.

Conclusion

The outcome will doubtless come as a relief to some groups active in the sector. The rigid approach apparently adopted by the FTT will have raised concerns that HMRC had wrongly applied the zero rate in many other cases.

The case is also a reminder of the difficulty in drawing lines in the field of treatments that may be characterised as “cosmetic”, but that provide relief from real-world conditions, either regardless of or in conjunction with some wider aesthetic benefit. This is an issue that has already been raised in various recent cases concerning the medical treatment exemption, such as Illuminate Skin Clinics Limited v HMRC [2025] UKUT 00341 (TCC), which is subject to rehearing in the FTT.

Although these are plainly difficult issues, it is particularly regrettable that there should be so little legal clarity, given the impact not only on end-users but also on an important and growing sector of the economy.