HMRC Lost the VAT Appeal. But Read For Why This Isn’t the Win Salons Think It Is
A VAT ruling involving a self-employed hairdresser was overturned this week and many salon owners may incorrectly assume this means the sector has “won” against HMRC.
It hasn’t.
Context is so important when it comes to Tax and HMRC didn’t lose because the VAT treatment was correct — they lost because they didn’t follow their own process correctly. This means nothing has changed about how VAT needs to be applied within salons.
In fact, this ruling has highlighted the areas of highest risk.
Why this matters
The hair and beauty industry already sits under enhanced scrutiny because of:
Chair rental arrangements
Hybrid commission models
Shared booking systems
Payments flowing through the salon
No clear independent trading evidence
This tribunal simply showed HMRC where the structural weaknesses are.
Expect now:
Stronger audits
Clearer VAT questioning
Faster investigations
Increased evidence requests
You could say that the decision didn’t close the door, it opened one.
What you should do now
If you:
rent chairs or rooms
run commission arrangements
split income with stylists
you need clarity on how your revenue should be treated and evidenced.
The salons who prepare now may not be affected when HMRC tightens their approach. Often the risks are not due to intentional separation but a misunderstanding of the rules and there is a very heavy focus on employment law in the conversations that happen in this topic. This is not the area that we have been advising on as that is a separate law - we deal with Tax Law and there is more than one involved.
Want deeper breakdowns and live updates?
We are covering this inside our Facebook community including:
What HMRC highlighted
What this means for salon owners
Practical structure examples
What to put in your agreements
Join here to stay ahead:
👉 [Salon and Beauty Therapist UK Tax Group]
This is a chance to fix things before HMRC resets its enforcement. Don’t ignore the warning disguised as a win.
If you are a brand or organisation that would like to collab or sponsor the work that we are doing in this area to educate and support the wider hair and beauty industry with expert tax guidance and advice please get in touch by emailing hello@thebeautyaccountant.co.uk