DECISION
I Introduction
1.
The Appellant, Prescription Eyewear Limited, trading as Glasses Direct
(“Glasses Direct”) appeals against two decisions of the Respondents (“HMRC”)
made on 4 November 2010 and 28 November 2011 respectively to reject the
Appellant’s request to agree an apportionment between what Glasses Direct contends
are exempt supplies and its standard rated supplies.
2.
Glasses Direct had proposed an effective tax rate of 13.4% but that
proposal was rejected on the basis that HMRC did not agree that Glasses Direct
made exempt supplies of medical services. Glasses Direct also made a claim for
repayment of overpaid VAT in the amount of £418,199.76 in respect of what it
contends are exempt supplies. This claim has been rejected by HMRC on the same
basis.
3.
The amount of VAT at issue is not in itself a matter for us to decide.
HMRC’s decisions were made solely on the basis of its contention that none of
the supplies made by Glasses Direct were exempt and therefore the question of
apportionment does not arise. HMRC’s statement of case did not question the
basis of the apportionment sought to be made by Glasses Direct; that is an
effective tax rate of 13.4% on the totality of its supplies. In those circumstances
we indicated that the Tribunal would not be favourably disposed to an
application to amend the statement of case at this stage and Mr McGurk rightly
did not press the point.
4.
Glasses Direct is a UK based online retailer of prescription glasses, including
prescription sunglasses, and owns and operates the website www.glassesdirect.co.uk. Customers
can place an order for prescription glasses through the Glasses Direct website
or by telephone. The supply of every pair of prescription glasses is
supervised by a qualified dispensing optician registered under the Opticians
Act 1989, as required by that legislation.
5.
Glasses Direct contends that in relation to every order of prescription
glasses it makes two supplies: an exempt supply of medical services
(specifically, dispensing services) and a taxable supply of goods, namely the
prescription glasses. HMRC’s position is that whereas High Street Dispensing
Opticians provide medical care in the form of personally measuring and fitting
the customer face to face, Glass Direct does not insofar as it neither
measures, nor fits, nor does anything else resembling the provision of medical
care. If they are wrong on that, HMRC contend that any medical care provided
on the facts of this case is ancillary to the supply of prescription glasses
with the same result namely that there is a single standard rated supply.
6.
We consider below the relevant legislation, guidance and authorities in
relation to the exemption for medical care in the context of the supplies made
by Glasses Direct. We then make findings of fact based on the evidence before
us as to the manner in which Glasses Direct’s business operates. We then set
out our decision on how Glasses Direct’s business is to be characterised for
VAT purposes in the light of our findings of fact, the relevant legal
principles and the submissions of the parties.
II Relevant legislation, guidance and authorities
7.
Article 132 of Council Directive 2006/112/EC (“the Principal VAT
Directive”) sets out various exemptions from VAT for “certain activities in the
public interest” which Member States are required to implement. Article
132(1)(c) provides that Member States shall exempt:
“the provision of medical care in the exercise of the
medical and paramedical professions as defined by the Member State concerned.”
8.
This exemption is given effect to in item 1(b) of Group 7 of Schedule 9
to the Value Added Tax Act 1994 (“VATA”) which provides for the exemption of:
“The supply of services consisting in the provision
of medical care by a person registered or enrolled in …
…
(b)
either of the registers of ophthalmic opticians or the register of dispensing
opticians kept under the Opticians Act 1989 or either of the lists kept under
section 9 of that Act of bodies corporate carrying on business as ophthalmic
opticians or as dispensing opticians.”
9.
Note 2 to this item provides:
“(2) Paragraphs (a) to (d) of item 1 and paragraphs
(a) and (b) of item 2 include supplies of services made by a person who is not
registered or enrolled in any of the registers or rolls specified in those
paragraphs where the services are wholly performed or directly supervised by a
person who is so registered or enrolled.”
Note
2 therefore makes provision for supplies of medical care made by persons under
the supervision of registered or enrolled opticians to be exempt as well as
such supplies made directly by persons so registered or enrolled.
10.
Section 7 of the Opticians Act 1989 (“the Act”) sets out the registers
that need to be maintained according to that Act as follows:
“The Council shall continue to maintain-
(a) two registers of ophthalmic opticians, one for
the registration of persons engaged or proposing to engage both in the testing
of sight and in the fitting and supply of optical appliances and the other for
the registration of persons engaged or proposing to engage in the testing of
sight, but not in the fitting and supply of optical appliances; and
(b) a register of dispensing opticians.”
11.
Sections 36(1) of the Act defines “dispensing optician” as:
“A person engaged or proposing to engage in the
fitting and supply of optical appliances.”
12.
Section 24 of the Act imposes restrictions on the testing of sight. It
provides:
“(1) Subject to the following provisions of this
section, a person who is not a registered medical practitioner or registered
ophthalmic optician shall not test the sight of another person.”
Subsection (4) of that
section provides that it is a criminal offence to contravene subsection (1).
13.
Section 26 of the Act provides:
“(1)
The Secretary of State may by regulations provide that, subject to any
exceptions specified in the regulations, when a registered medical practitioner
or registered ophthalmic optician tests the sight of another person, it shall
be his duty
(a)
to perform such examinations of the eye for the purpose of detecting injury,
disease or abnormality in the eye or elsewhere as the regulations may require,
and
(b) immediately following the test to give the person
whose sight he has tested a written statement
(i)
that he has carried out the examinations that the regulations require, and
(ii)
that he is or (as the case may be) is not referring him to a registered medical
practitioner.
(2)
Except in circumstances specified in regulations under subsection (3) (b)
below, it shall also be his duty to give the person whose sight he has tested,
immediately following the test, either a signed, written prescription for an
optical appliance or a signed, written statement that he does not need to wear
or use an optical appliance.”
Thus
it can be seen from this provision that an ophthalmic optician must provide the
patient with a copy of any prescription that has been required necessitated by
reason of the eye test.
14.
Section 27(1) of the Act provides:
“(1) Subject to the following provisions of this
section, a person shall not sell any optical appliance unless the sale is
effected by or under the supervision of a registered medical practitioner or
registered optician.”
Subsection(10) provides that it is a criminal offence to
contravene subsection (1). “Registered optician” is defined in section 36 of
the Act as “a person who is registered in any of the registers”, so that
includes ophthalmic opticians and dispensing opticians.
15.
It is to be noted that the restriction on sale of optical appliances
except by or under the supervision of the relevant practitioner only applies to
retail sales. Section 27(5)(a) and (b) of the Act provides:
“(5) Subsection (1) above shall not apply to the
sale of an optical appliance –
(a)
to a registered medical practitioner, registered optician or enrolled body
corporate for the purposes of his practice or of his or its business;
(b)
to a manufacturer of or dealer in optical appliances for the purposes of his
business.
….”
16.
It is helpful to analyse in chronological order the various decisions of
the European Court of Justice (“ECJ”) and the UK courts to see how the
jurisprudence as to what constitutes “medical care” has developed. In order
for Glasses Direct to succeed on its appeal it needs to satisfy us that the
services provided by its dispensing opticians constitute “medical care”.
17.
We start with Case 353/85, EC Commission v United Kingdom [1988]
STC 251. Rather ironically, bearing in mind HMRC’s position in relation to
these appeals, this case concerned infraction proceedings brought before the
ECJ by the European Commission against the United Kingdom in relation to
predecessor legislation to that now contained in VATA relating to the exemption
for medical care. The relevant legislation at the time contained in the Value
Added Tax 1983 (Item 1 Group 7 of Schedule 6 to that Act), provided an
exemption for –
“The supply of services and in connection with it,
the supply of goods, by a person enrolled in any of the following …”.
18.
This exemption extended to those entered into either of the registers of
ophthalmic opticians or dispensing opticians maintained under the predecessor
legislation to the Act. Consequently, as the ECJ found, the supply of
corrective spectacles by registered opticians was exempt when they were
supplied in connection with the provision of services.
19.
The UK Government argued that the exemption for “medical care” covered
goods supplied in connection with the services provided by certain recognised
medical and paramedical professions and therefore that the supply of corrective
spectacles, either by an ophthalmic optician or by a dispensing optician, is
closely connected with the service provided. The Court rejected this argument,
its conclusion being set out in paragraph 32 of its judgment as follows:
“32. Indent (b) provides that the member states are
to exempt from value added tax: ‘Hospital and medical care and closely related
activities undertaken by bodies governed by public law … The services involved
therefore encompass a whole range of medical care normally provided on a
non-profit-making basis in establishments pursuing social purposes such as the
protection of human health.
33. On the other hand, indent (c) provides that the
member states are to exempt from value added tax: ‘The provision of medical
care in the exercise of the medical and paramedical professions.’
It is clear from the position of that indent,
directly following the indent concerning hospital care, and from its context,
that the services involved are provided outside hospitals and similar
establishments and within the framework of a confidential relationship between
the patient and the person providing the care, a relationship which is normally
established in the consulting room of that person. In those circumstances,
apart from minor provision of goods which are strictly necessary at the time
when the care if provided, the supply of medicines and other goods, such as
corrective spectacles prescribed by a doctor or by other authorised persons, is
physically and economically dissociable from the provision of the service.
34. It follows that the exemption from tax of goods
supplied in connection with the medical care referred to in indent (c) cannot
be justified by indent (b), as the United Kingdom maintains.”
20.
The ECJ held in this case that the supply of glasses by a dispensing
optician was a separate supply to the supply of dispensing services, thus
delineating the scope of the exemption by reference to the provision of the
dispensing services, not the goods supplied.
21.
As a result of this case, the UK legislation was changed and this change
is now reflected in Item 1(b) of Group 7 of Schedule 9 to VATA where the
exemption is restricted to “the supply of services consisting in the provision
of medical care …” by ophthalmic or dispensing opticians.
22.
This legislation and the scope of the exemption for dispensing services
was considered by McCullough J in Customs & Excise Commissioners v
Leightons Ltd [1995] STC 458. The headnote summarises the facts and issues
in that case as follows:
“Leightons carried on business as opticians. It
employed ophthalmic opticians to carry out eye tests and issue prescriptions,
and dispensing opticians to take measurements of patients’ eyes, give advice,
prepare and check specifications for lenses and frames, fit the spectacles with
patients and make any modifications required. The Commissioners accepted that
the services of the ophthalmic opticians were exempt supplies separate from the
supply of spectacles. However, in September 1992 they issued a decision that
the supply of spectacles by L was a single standard-rated supply of goods to
which the dispensing opticians’ services were merely ancillary. Leightons
appealed contending that the services of dispensing opticians were separate
exempt supplies and that the consideration received for the spectacles should
be apportioned accordingly.”
23.
The facts as to how Leightons provided its dispensing services
were agreed to be as set out at page 461 c to f as follows:
“It is agreed that the stages in the sale of a pair
of corrective spectacles can be summarised as follows:
(i) The patient is first seen by a dispensing
optician who examines the patient’s existing spectacles (if any), prepares a
record card and decides on the appropriate next step.
(ii) Usually the patient has his eyes tested by an
ophthalmologist (who is a registered medical practitioner) or an ophthalmic
optician who writes out a prescription.
(iii) The patient takes the prescription to the
dispensing optician who then or later may discuss matters with the prescriber.
(iv) The dispensing optician takes detailed
measurements of the patient’s eyes and other features and prepares detailed
notes.
(v)
The dispensing optician advises the patient on the options available
in respect of lenses and frames.
(vi) The dispensing
optician draws up a specification for the lenses and frames from the
measurements which he has taken.
(vii) The specification is sent
to a laboratory which produces the lenses and frames to specification.
(viii) When the
spectacles are returned the dispensing optician will check whether they conform
to the specifications sent.
(ix) And
finally the dispensing optician will fit the spectacles with the patient and
make any minor modifications required.”
24.
McCullough J identified the issue to be determined at page 461 g as
follows:
“It is clear that the corrective spectacles which a
dispensing optician supplies are ‘goods’ and that the dispensing services he
performs are ‘services’. The sole issue in the case is whether the supply of
the spectacles constitutes a single supply of goods to which the dispensing
optician’s services are merely ancillary or whether it involves two separate
supplies: one of goods and the other of services.”
25.
He determined the issue at pages 465 f to 466 j as follows:
“Para (b) of item 1 in Group 7 of Schedule 6 to the
1983 Act exempts the supply of services by a person registered or enrolled in
the register of dispensing opticians kept under the Opticians Act 1989. If the
services of dispensing opticians are to be regarded as ancillary to the supply
of corrective spectacles – which I understand to be the majority of the work of
dispensing opticians – what remains of the exemption? Merely the services of
dispensing opticians to patients who want to be measured for frames and lenses
which the patients then have made up by someone else and the patients who want
a similar service prior to their being supplied by someone else with safety
spectacles and gas masks. How realistic is it to grant exemption to the
services of the dispensing optician in the exceptional situations but to deny
it in the typical one? …
How then should one resolve the issue in the typical
provision of corrective spectacles by a dispensing optician?
In consideration of the single payment he receives
the dispensing optician provides both his professional services and
spectacles. I have to ask whether in substance and reality the one supply is
ancillary to the other – or the other ancillary to the one – or whether there
are separate supplies.
I have regard to the practical and fiscal
consequences of each possible answer.
…
If I find there is one supply of goods to which the
services are ancillary the supply will be standard-rated. For reasons already
expressed this would deprive para (b) of item 1 in Group 7 of Sch 6 of much of
the effect that the legislative history suggests Parliament intended it to
have. It would lead to what I see as the illogicality of exempting a
dispensing optician’s services relating to the supply of safety spectacles and
gas masks but not of spectacles supplied in the ordinary way …
If I find that there are two supplies no practical
difficulty results. The Commissioners accept that apportionment of the
consideration as between services and goods can readily be made.
Spectacles may, of course, be supplied without
dispensing services and vice versa, but in the typical supply under
consideration the two elements are closely linked, each dependent on the
other. Frames holding lenses made up to the ophthalmologist’s (or ophthalmic
optician’s) prescription will not meet the needs of the patient if they are not
the height, horizontal distances and distance from the eyes that he requires …
This consideration may be thought to point to there being a single supply … in
terms of cost, I am not surprised to be told that the majority is attributable
to the element of service. Where the two elements are roughly evenly balanced
the more arbitrary become the consequences of a decision to classify the supply
as a single supply of either kind. This may well be a pointer to the fact that
there are indeed two separate supplies. And this is the conclusion to which I
have come.
For these various reasons – the legislative history,
the desirability of reaching the conclusion that Parliament would regard as
fulfilling its intention, the position relative to safety spectacles and gas
masks and other instances where the patient, having been measured and given his
specification, goes elsewhere, the practicalities, the fiscal consequences and
the roughly even balance of the two elements – I hold that in substance and
reality there are here two separate supplies: one of corrective spectacles, the
other of the services of the dispensing optician. My only doubt would be
whether this includes the relatively small element of service provided when the
patient comes to collect his spectacles. Even here I would say that this was
ancillary to the service of measuring and specifying, so that it too is
exempt.”
26.
Thus the clear conclusion of McCullough J is that dispensing services
are a separate supply to the supply of glasses; HMRC’s argument that there was
a single supply of goods with the dispensing optician’s services being
ancillary was rejected.
27.
We observe that McCullough J’s analysis was based on the factual
scenario where the dispensing services took place face to face with the patient
on the optician’s premises. Mr McGurk in this case places emphasis on the
personal service of the dispensing optician in examining the patient and
measuring and fitting corrective spectacles. He submits that the provision of
spectacles through a customer driven process online gives rise to new questions
about the nature and extent of dispensing services provided and the application
of the principles relating to the exemption of dispensing services in this new
sphere. He observes that in Leightons at no stage did McCullough J
analyse whether each of the nine stages of the dispensing services set out in
paragraph 23 above could be said to consist of the provision of medical care.
As we shall see, there are subsequent cases decided in the ECJ on the meaning
of “medical care”. We accept Mr McGurk’s submission that it is necessary to
consider whether each stage of the dispensing services as provided by Glasses
Direct through its online business model has as its purpose the provision of
medical care, as interpreted in the ECJ authorities in order to establish the
precise scope of the exemption.
28.
Ms Shaw’s overarching submission is that the principles laid down in Leightons
still hold good and can be applied to Glasses Direct’s business model; in
particular all the stages described in paragraph 23 above with the exception of
(ii) are satisfied in this case albeit that they are satisfied in a slightly
different way to a High Street optician.
29.
The issue as to whether the provision of spectacles constitute two
separate supplies or a single supply with the dispensing optician’s services
being ancillary was revisited in the VAT and Duties Tribunal in Southport
Visionplus v Commissioners for Customs and Excise (VTD 17502). The
Commissioners decided to test the issue again in the light of the guidance
given by the ECJ in the well known case Case C-349/96 Card Protection Plan
Ltd v Customs and Excise Commissioners [1999] STC 270 as to how to
determine whether a transaction which comprised several elements was to be
regarded as a single supply or as two or more distinct supplies assessable
separately.
30.
The criteria laid down in Card Protection Plan for ascertaining
whether a transaction amounts to a single supply or multiple supplies, as set
out in paragraphs 29 and 31 of the ECJ’s judgment can be summarised as follows:
(1)
Every supply of a service must normally be regarded as distinct and
independent;
(2)
A supply which comprises from an economic point of view a single supply
should not be artificially split;
(3)
There is a single supply where one or more elements constitute the
principal service to which the other elements are ancillary (in the sense of
not constituting for customers an aim in themselves but a better means of
enjoying the principal service); and
(4)
The fact that a single price is charged is not decisive.
31.
The Tribunal in Southport Visionplus applied these principles to
the facts of that case, which were broadly identical to those on which the
decision in Leightons were based and concluded at paragraphs 61 and 62
of its decision:
“61. In the present appeal the price for dispensing
services is more than one half of the price for the total supply. On that
ground alone, the supply of the dispensing services should not be treated as
ancillary to the supply of goods. However, even if the proportion of the price
were not a relevant consideration, we would still have concluded that the
supply of dispensing services was not ancillary to the supply of the goods as
the services are an aim in themselves. Customers could purchase ready-made
reading spectacles if they wished to do so but, if they want dispensed
spectacles, they know that they have to pay for the services of the dispensing
optician. Neither do we see the dispensing service as a means of “better
enjoying” the optical appliance; a dispensed optical appliance could not be
enjoyed at all without the dispensing service.
62. We conclude that in this appeal there are two
equivalent supplies, and not one principal supply and one ancillary supply.”
32.
As submitted by Miss Shaw, it appears to us that the key question is
whether from the point of view of the typical consumer the supply concerned (in
this case prescription glasses) constitutes a single indivisible economic
supply which it would be artificial to split or whether it constitutes two distinct
and independent supplies.
33.
In HMRC v. Weight Watchers (UK) Ltd [2008] STC 2313, in
Paragraphs 17 of its judgment the Court of Appeal gave guidance as to how that
question should be answered.
“[17] In summary, therefore, the court must have
regard to all the circumstances. It must apply the relevant test on an
objective basis. There are various formulations of what the relevant test is in
Card Protection Plan (para 29) and Levob (para 22 and ruling 1). Common to all
of them are the requirements that the court must look at the transactions from
the view point of the typical consumer rather than the supplier. The extent of
the linkage between the relevant transactions must be considered from an
economic point of view, rather than, say, a physical, temporal or other
standpoint. So regarded the question then is whether it would be artificial to
split them into separate supplies. The fact that the supplier has charged a
single price for the aggregate of the transactions is a relevant circumstance
but is not conclusive because that price may be apportioned.”
34.
In both Leightons and Southport Visionplus this question
was clearly answered in the case of prescription glasses provided by dispensing
opticians on the High Street by concluding that there are two separate supplies
and this is consistent with the ECJ’s findings in EC Commission v UK where it concluded in paragraph 33 of its judgment:
“[33] … In those circumstances, apart from minor
provisions of goods which are strictly necessary at the time when the care is
provided, the supply of medicines and other goods, such as corrective
spectacles prescribed by a doctor or by other authorised persons, is physically
and economically dissociable from the provision of the service.”
35.
Our conclusion from these authorities is that we need to establish
whether the services provided by the dispensing opticians in this case are of a
different character to those considered in Leightons and Southport
Visionplus. We need to consider the question as to whether, as submitted
by Mr McGurk, those services provided by the dispensing opticians in this case
which constitute “medical care” are so minimal that they should be regarded as
ancillary to the provision of the goods, namely the prescription glasses. In
that regard we need also to consider what services provided by the dispensing
optician can properly be regarded as “medical care” and we shall turn to the
relevant authorities on this issue.
36.
Before turning to the authorities on the meaning of medical care, we
observe that HMRC have since the Leightons case accepted that the sale
of prescription glasses under the supervision of a dispensing optician involves
two separate supplies. Its, guidance, set out in VAT Information Sheet 08/99 provides:
“Since the ruling of the High Court in the case of
Leightons/Eye Tech in 1995, it has been accepted by Customs and Excise that the
supply of spectacles by an optician is a mixture of VAT – exempt dispensing
services and standard-rated frames and lenses”.
37.
We note that there is no attempt in this guidance to distinguish those
dispensing services which constitute “medical care” and those that do not. The
guidance proceeds on the basis that all the services provided by a dispensing
optician in relation to a supply of prescription glasses will constitute
“medical care” and accordingly will amount to an exempt supply. In this case
HMRC are seeking to characterise the services provided by Glasses Direct’s
dispensing opticians differently. Mr McGurk submits that they are professional
services but do not amount to medical care because of the lack of face to face
contact and the more limited role that Glasses Direct’s dispensing opticians
perform than is the case with a sale of prescription glasses on the High
Street.
38.
We therefore turn to the question as to what constitutes “medical care”.
39.
Mr McGurk referred us to Case C-348/98 D v W ECR I-695. In that
case a doctor in Austria who was appointed by a court as a medical expert and
instructed to establish on the basis of a genetic test whether the clamant in
the proceedings could be the child of the Defendant, included a sum for VAT in
her invoice. The ECJ held that the exemption within Article 13(1)(c) did not
include medical services which do not consist of providing medical care by
diagnosing and treating a disease or any other health disorder. At paragraphs
18-19 it held:
“… the concept of ‘provision of medical care’ does
not lend itself to an interpretation which includes medical interventions
carried out for a purpose other than that of diagnosing, treating and, in so
far as possible, curing diseases or health disorders.
So services not having a therapeutic aim must,
having regard to the principle that any provision establishing an exemption
from VAT is to be interpreted strictly, be excluded from the scope of Article
13A(1)(c) of the Sixth Directive and therefore subject to VAT.”
Mr McGurk submits, and we accept, that it is therefore
crucial not just to look at the activity, but the purpose for which the
activity was undertaken. If it was undertaken for a purpose other than that of
diagnosing, treating and, in so far as possible, curing diseases or health
disorders, then it will not constitute the provision of medical care.
40.
Nevertheless, the exemption must be construed consistently with the
objectives pursued by the exemption for medical care which is to reduce the
cost of medical care and make it more accessible to individuals. This appears
from Case C-45/01 Chistoph-Dornier-Stiftung Für Klinische Psychologie v
Finanzamt Giessen [2005] STC 228 where the Court considered whether psychotherapeutic
treatment provided by an entity governed by private law fell within the
exemption.
41.
In finding that the treatment provided by qualified psychologists in a
hospital environment fulfils the condition of having a therapeutic purpose the
Court held in paragraphs 42 to 44 and 47 of its judgment as follows:
“42. According to the Court of Justice’s case-law,
the exemptions envisaged in art 13 of the Sixth Directive are to be interpreted
strictly since they constitute exceptions to the general principle that VAT is
to be levied on all services supplied for consideration by a taxable person …
However, the interpretation of the terms used in that provision must be
consistent with the objectives pursued by those exemptions and comply with the
requirements of the principle of fiscal neutrality inherent in the common
system of VAT.
43. It is apparent from the case-law that the
objective of reducing the cost of medical care and making that care more
accessible to individuals is common to both the exemption provided for in art
13A(1)(b) of the Sixth Directive and that in letter (c) of the same provision.
44. It must also be borne in mind that the
principle of fiscal neutrality precludes, inter alia, economic operators
carrying on the same activities from being treated differently as far as the
levying of VAT is concerned.
…
47. Next, as correctly pointed out by the Advocate
General in points 44 to 46 of her opinion, the criterion for drawing a clear
distinction between the two tax exemptions provided for in art 13A(1)(b) and
(c) is less the nature of the service than the place where it is provided. The
Court of Justice has held that, under art 13A(13A
(1)() (b),
it is appropriate to exempt services encompassing a whole range of medical care
in establishments pursuing social purposes such as the protection of human
health, whereas letter (c) of the same provision exempts services provided
outside hospitals and within the framework of a confidential relationship
between the patient and the person providing the care. Whilst it is true that
the Court of Justice in that case found that the exemption of supplies of goods
effected in connection with the provision of medical care envisages in art
13A(1)(c) could not be justified under letter (b) of the same provision, that
interpretation follows inter alia from the fact that the latter provision
covers duly recognised establishments pursuing social purposes and provides
expressly for exemption of activities which are closely linked to medical care;
the same cannot be said of art 13A(1)(c).
48. It should also be borne in mind that, given the
objective of reducing health care costs, the term medical care in art 13A(13A
(1)() (b)
does not call for an especially narrow interpretation. However, the services
covered by that term, like those covered by provision of medical care in letter
(c) of the same provision, must have as its purpose the diagnosis, treatment
and, in so far as possible, cure of diseases or health disorders. It is not
disputed that the treatment provided by qualified psychologists in a hospital
environment fulfils the condition of having a therapeutic purpose.
49. Lastly, it must be pointed out that that
interpretation of the term medical care in art 13(1)()
(b) is in keeping with the principle of fiscal neutrality because
paramedical services, such as treatment given by qualified psychologists, are
exempt from VAT regardless of where they are provided.”
42.
We note from this judgment that whilst the exemption is to be construed
strictly it is not to be given an especially narrow interpretation. Ms Shaw
relies on this case to demonstrate that there is no basis for distinguishing
between services provided by a dispensing optician in a High Street opticians
and the services of a dispensing optician employed by Glasses Direct, just as
there was no basis for distinguishing between supply of psychotherapeutic
treatment provided in a hospital facility and in an outpatient facility in the
Christoph-Dormie-Stiftung case.
43.
Notwithstanding the principle that for activities to amount to “medical
care” they must have as their purpose the diagnosis, treatment and as far as
possible cure of diseases or health disorders it has been held that the term
will include medical services effected for prophylactic purposes. In Case
C-307/01 d’Ambrumenil v. CCE [2005] STC 560 a dispute arose as to the
tax treatment of certain activities including:
(a)
Medical examinations of individuals for employers or insurance
companies;
(b)
The taking of blood or other bodily samples to test for the presence or
viruses, infections or other diseases on behalf of employers or insurers;
(c)
Certification of medical fitness, for example, fitness to travel;
(d)
Medical examinations conducted with a view to the preparation of expert
medical reports.
44.
At paragraph 52 of its judgment the ECJ recalled previous case law to
the effect that the exemptions envisaged for medical care “are to be
interpreted strictly since they constitute exceptions to the general principle
that VAT is to be levied on all services supplied for consideration by a
taxable person”.
45.
The ECJ then stated that the exemptions did not cover all the services
which may be effected by the exercise of the medical and paramedical
professions. At paragraphs 58-60, the Court held:
“While it follows from [the] case law that the
‘provision of medical care’ must have a therapeutic aim [although] it does not
necessarily follow therefrom that the therapeutic purpose of a service must be
confined within an especially narrow compass … medical services effected from
prophylactic purposes may benefit from the exemption under Article 13A(1)(c).
Even in cases where it is clear that the persons who are the subject of
examinations or other medical interventions of a prophylactic nature and not
suffering from any disease or health disorder, the inclusion of those services
within the meaning of ‘provision of medical care’ is consistent with the objective
of reducing the cost of health care …
On the other hand, medical services effected for a
purpose other than that of protecting, including maintaining or restoring,
human health may not, according to the Court’s case law, benefit from the
exemption under Article 13A(1)(c) of the Sixth Directive. Having regard to
their propose, to make those services subject to VAT is not contrary to the
objective of reducing the cost of health care and of making it more accessible
to individuals.
… it is the purpose of a medical service which
determines whether its should be exempt from VAT.
Therefore, if the context in which a medical service is effected enables it to
be established that its principal purpose is not the protection, including the
maintenance or restoration, of health … the exemption under Article 13A(13A
(1)() (c)
does not apply to the service.”
46.
The Court found that since none of the purposes for which the
examinations were undertaken could be said to relate to the provision of
medical care so defined, they did not benefit from the exemption.
47.
It is also clear that services can amount to medical care where they are
provided remotely or without any physical or face-to-face contact between the
supplier and the patient. This appears from Case C-106/05 LuP GmbH v.
Finanzamt Bodium-Mitte [2008] STC 1742 where the question to be determined
was whether testing services provided by laboratories affiliated with general
practitioners, who prescribed the tests concerned in the course of the care
they provided to patients who required testing, qualified for the exemption.
The ECJ concluded that these services were capable of qualifying for the
exemption. Its reasoning was set in paragraph 28 to 32 of its judgment as
follows:
“28. In the present case, the national court
expresses doubts as to whether medical tests such as those at issue in the main
proceedings do constitute such care, although it acknowledges that those tests
assist in the diagnosis of diseases. The Commission maintains that, on a
functional and teleological interpretation of the relevant provisions of the
Sixth Directive, a laboratory carrying out such tests cannot be equated with a
centre for diagnosis because those tests serve merely to establish the
diagnosis and, on a systematic interpretation of those same provisions, those
tests could be viewed as being medical care because they serve to establish the
diagnosis and are an integral part thereof.
29. It should be borne in mind that, whilst
‘medical care’ and ‘the provision of medical care’ must have a therapeutic aim,
it does not necessarily follow that the therapeutic purpose of a service must
be confined within a particular narrow compass. The Court’s case law is to the
effect that medical services effected for prophylactic purposes may benefit
from the exemption under art 13A(1)(c) of the Sixth Directive. Even in cases
where it is clear that the persons who are the subject of examinations or other
medical interventions of a prophylactic nature are not suffering from any
disease or health disorder, the inclusion of those services within the meaning
of ‘medical care’ and ‘the provision of medical care’ is consistent with the
objective of reducing the cost of health care, which is common to both the
exemption under art 13A(13A (1)()
(b) and that under (c) of that paragraph. Accordingly, medical
services effected for the purpose of protecting, including maintaining or
restoring, human health may benefit from the exemption under art 13A(1)(b) and
(c) of that directive …
30. Moreover, medical tests which, as in the
present case, are prescribed by general practitioners as part of the care they
provide may contribute towards maintaining human health because, like any
medical service effected for prophylactic purposes, they allow for the
observation and examination of patients before it becomes necessary to
diagnose, care for or heal a potential illness.
31. In those circumstances, as maintained by LuP at
the hearing, and as acknowledged as being possible by the national court and
the Commission, the court finds that, in the light of the objective of reducing
health care costs pursued by the abovementioned exemptions, medical tests such
as those at issue in the main proceedings, which have as their purpose the
observation and examination of patients for prophylactic purposes, may
constitute ‘medical care’ within the meaning of art 13A(1)(b) of the Sixth
Directive or ‘the provision of medical care’ within the meaning of letter (c)
of the same paragraph …
32. This interpretation is, moreover, consistent with
the principle of fiscal neutrality, which precludes treating similar supplies
of services, which are thus in competition with each other, differently for VAT
purposes. It would be contrary to that principle to make medical tests
prescribed by general practitioners subject to a different VAT scheme depending
on where they are carried out when they are equivalent from a qualitative point
of view in the light of the professional qualifications of the service
providers in question.
48.
It is also clear that services which only form part of the therapeutic process
can qualify as medical care. This appears from Case C-156/09 Finanzamt
Leverkusen v. Verigen Transportation Service International AG [2011] STC 255. This case concerned a service provided by a biotech company which
received human tissue extracted from a patient and subjected it to a process to
produce cartilage cells which were sent to the medical practitioner for
re-implantation into the patient. The ECJ held that the services constituted
medical care. Its reasoning was set out in paragraphs 25 to 28 of its judgment
as follows:
“25. Here.
Here, it is not disputed that the process consisting in the
removal of cartilage material to extract cells which will then be multiplied
for re-implantation in a patient has, overall, a therapeutic purpose.
26. The specific services provided by VTSI form,
admittedly, only part of that overall process. However, as the Advocate General
observed at point 23 of her opinion, they are an essential, inherent and
inseparable part of the process, none of the stages of which can usefully be
performed in isolation from the others.
27. It follows from the foregoing that the
extraction of joint cartilage cells from cartilage material taken from a human and
the subsequent multiplication of the cells for re-implantation for a
therapeutic purpose falls within the concept of ‘provision of medical care’
referred to in art 13A(1)( c) of the Sixth Directive. Such an interpretation
is also consistent with the objective of reducing the cost of health care
referred to in that provision …
28. The.
The fact that the services are carried out by laboratory staff who
are not qualified medical practitioners is irrelevant, inasmuch as it is not
necessary for every aspect of therapeutic care to be provided by medical
staff.”
49.
However, it is also clear that the services concerned must not be too
remote from the therapeutic purpose. This appears from Case C-86/09 Future
Health Technologies Limited v. HMRC [2010] STC 255 which concerned the tax
status of activities consisting in the despatch of a kit for collecting blood
from the umbilical cord of newborn children, the testing and processing of that
blood and, where appropriate, in the storage of stem cells contained in it for
possible future therapeutic use. The stem cells were collected with a view to
their possible future use in medical treatment of that child itself or of other
persons, e.g. a future sibling. The cells were not permitted to be used for
any other purpose.
50.
HMRC took the view that the principal supply was storage of stem cells,
an activity that did not constitute medical treatment and that the analysis and
processing of the cells ancillary to that activity. It further considered that
even if the activities were to be examined separately, testing and processing
of stem cells was not to be regarded as medical care. The ECJ agree that this
did not constitute the ‘provision of medical care’. Its reasoning was set out
in paragraphs 43 and 44 of its judgment as follows:
“43. However, the activities in question in the main
proceedings, as carried out by FHT, namely the despatch of a kit for collecting
umbilical cord blood and the testing and processing of that blood and, where
appropriate, the storage of stem cells contained in it, whether taken together
or separately, do not appear to have as their direct purpose any actual
diagnosis, treatment or cure of diseases or health disorders, or any actual
protection, maintenance or restoration of health.
44. In that regard, while the detection of illness
may admittedly be one of the possible purposes of collecting stem cells from
umbilical cord blood, it seems to be clear from the documents in the court
file, and particularly from the contract, that the services provided by FHT are
intended only to ensure that a particular resource will be available for
medical treatment in the uncertain event that treatment becomes necessary but
not, as such, to avert, avoid or prevent the occurrence of a health disorder,
or to detect such a disorder in a latent or incipient state. …”
51.
Finally, it is apparent from the foregoing analysis of the authorities
that the principle of fiscal neutrality must be borne in mind when considering
whether a particular service constitutes medical care. Most recently, in
joined cases C-259/10 and C-260/10 Rank Group Plc v. HMRC [2012] STC 23
the ECJ established the relevant principles as set out in paragraphs 32 to 35
and 42 to 44 of its judgment as follows:
“… According to settled case law, the principle of
fiscal neutrality precludes treating similar goods and supplies of services,
which are thus in competition with each other, differently for VAT purposes …
… According to that description of the principle the
similar nature of two supplies of services entails the consequence that they
are in competition with each other.
… Accordingly, the actual existence of competition
between two supplies does not constitute an independent and additional
condition for infringement of the principle of fiscal neutrality if the
supplies in question are identical or similar from the point of view of the
consumer and meet the same needs of the consumer …
… That consideration is also valid as regards the
existence of distortion of competition. The fact that two identical or similar
supplies which meet the same needs are treated differently for the purposes of
VAT gives rise, as a general rule, to a distortion of competition.
… [The] principle precludes treating similar goods
and supplies of services different for VAT purposes.
… In order to determine whether two supplies of
services are similar within the meaning of the case law cited in that
paragraph, account must be taken of the point of view of a typical consumer.
… Two supplies of services are therefore similar
where they have similar characteristics and meet the same needs from the point
of view of consumers, the test being whether their use is comparable, and where
the differences between them do not have a significant influence on the
decision of the average consumer to use one such service or the other … “
52.
These principles are relevant in the present case when considering
HMRC’s position that there is a very real and significant difference between a
High Street and an online offering of prescription glasses which justifies a
different treatment for VAT purposes.
53.
In our view the following principles emerge from the legislation and the
authorities:
(1)
Pursuant to the authority given in Article 132(1)(c) of the Principle
VAT Directive the United Kingdom has, through Item 1(b) of Group 7 of Schedule
9 VATA, provided an exemption from VAT for medical care provided by registered
opticians or persons directly supervised by them;
(2)
By virtue of section 27 of the Act all retail sales of corrective
spectacles must be effected by or under the supervision of a registered medical
practitioner or optician. Any breach of this provision is a criminal offence.
Parliament has therefore considered that it is essential that such a
practitioner has a significant role in the sale of any such item;
(3)
The supply of corrective spectacles is physically and economically
dissociable from the services of the dispensing optician;
(4)
The relevant domestic authorities clearly establish in relation to
retail sales on the High Street that, notwithstanding the close link between
the supply of corrective spectacles and dispensing services which are each
dependent on the other, there are two separate supplies, an exempt supply of
dispensing services and a standard supply of spectacles. Although not
specifically argued, it was assumed in those cases that the dispensing services
provided in each of the stages involved in the sale of corrective spectacles
constituted medical care;
(5)
In the light of the subsequent jurisprudence concerning single and
multiple supplies it is necessary in any particular case to consider whether,
from the point of view of the typical consumer, there is a single indivisible
economic supply which would be artificial to split or whether there are two
distinct and independent supplies;
(6)
The concept of medical care does not embrace services that are not
provided for a purpose other than the diagnosis, treatment and, in so far as
possible, cure of diseases or health disorders.
(7)
Nevertheless, the exemption for medical care, although to be construed
strictly, is not to be confined to an especially narrow compass. It must be
construed consistently with the objectives pursued by the exemption, namely to
reduce the cost of medical care and make such care more accessible. The
exemption will include medical services provided for prophylactic purposes or
provided remotely or without physical or face to face contact;
(8)
Services which only form part of the therapeutic process can qualify as
medical care but they will not qualify if they are too remote from the
therapeutic purpose; and
(9)
In construing the exemption the principle of fiscal neutrality must be
borne in mind, that is services which from the point of view of the consumer
are comparable must not be treated differently for VAT purposes.
54.
Before leaving our analysis of the law we should make it clear that in
our view the process by which a patient is provided with spectacles to correct
a defect in his eyesight is a therapeutic process. It is a process which
starts with the diagnosis of the defect in question, following an eye test, the
selection, measuring and fitting of corrective spectacles to correct the defect
and the supply of those spectacles. We do not understand HMRC to dispute that
point. The various stages in that process were described clearly by McCullough
J in Leightons (see paragraph 23 above) and he effectively decided that
the involvement of the dispensing optician in each of the stages in which he
participated amounted to medical care. We need to decide whether on the facts
of this case the services provided by Glasses Direct’s dispensing opticians do
amount to medical care such that they benefit from the exemption but in so
doing our starting point is that the process as a whole is a therapeutic one of
the nature we have described.
III Findings of Fact
General
55.
We had before us various documents relating to Glasses Direct’s business
including extracts from its website showing the various steps in the online
purchasing process for the corrective spectacles that it sells, various
explanatory material provided through the website to assist customers in the
purchasing process, certain internal documents regarding Glasses Direct’s
processes for supervising its sales, selected transcripts of telephone calls
from customers and a DVD containing selected videos from Glasses Direct’s
website designed to assist customers.
56.
We had witness statements from Howard Bryant, the Chief Financial
Officer of Glasses Direct and Mr David Hutchfield, a qualified dispensing
optician who is Sales and Service Manager at Glasses Direct. Both witnesses
gave oral evidence and were cross-examined in depth. We found both Mr Bryant
and Mr Hutchfield to be honest and reliable witnesses and had no hesitation in
accepting their evidence. In particular, Mr Hutchfield was an extremely
knowledgeable witness, clearly committed to ensuring that high standards of
customer service are provided by Glasses Direct’s dispensing opticians and with
in depth experience of his own in performing a supervisory role within Glasses
Direct and hands on experience with High Street opticians. This experience led
us to accept his evidence on the comparison to be made between how the two
businesses models operated in practice. From the documents submitted and the
evidence we heard we make the following findings of fact.
57.
Before embarking on a review of the evidence it is helpful to set the
scene by explaining the options available to those who need to purchase
corrective spectacles.
58.
The first stage in the process is that the patient will undertake an eye
test. This will be conducted by an optometrist (or an ophthalmic optician).
As we have seen from section 24 of the Act there are restrictions on who may
lawfully carry out eye tests. The eye tests will enable a diagnosis to be made
of the state of the patient’s eyes and consequently whether corrective
spectacles are required. Following the eye test, the optometrist will record
information about the patient in a prescription which must be given to the
patient. This prescription will indicate the strength of the prescription
glasses that will be required, and any additions that are necessary to make the
glasses suitable for reading or computer work. It is common ground that the
services of the optometrist constitute medical care and the fees for his
services will be exempt from VAT.
59.
The patient then has a choice as to whether he will ask the same
optician’s practice to provide his glasses or whether to take his prescription
elsewhere for that purpose. Mr Hutchfield’s evidence, which we accept, is that
approximately 30-40% of theof the
purchasers of prescription glasses exercise this choice to go elsewhere.
Glasses Direct does not conduct eye tests so its market is comprised entirely
of those 30 to 40% of patients who exercise that choice. The starting position
for Glasses Direct is therefore no different to a High Street Optician who
receives a patient bringing a prescription from another optician; they both start
with the same information in the form of the prescription.
60.
Until 2004 the patient would have to have visited an optician face to
face to order his glasses. Glasses Direct was founded in that year as the first
online prescription glasses retailer in the UK. Mr Bryant’s evidence, which we
accept, is that the aim of the company is to provide those who require
prescription glasses with a better value product at a more accessible cost
without compromising on the quality of customer care and service.
61.
We were told that Glasses Direct has by far the largest market share for
online sales of prescription glasses in the UK; it was estimated by Mr Bryant
as being as large as the rest of its competitors put together. Nevertheless,
it is a small market, representing only one to two percent of the total number
of prescription glasses sold in the UK. The business is still loss making;
there has been a high upfront investment in the systems and people necessary to
deliver an online business. It has also been a slow process to build up a critical
mass of customers which is essential to recoup the high upfront costs of a
online business; Mr Bryant acknowledged the wariness of customers to accept
that it was appropriate to buy prescription glasses online, thus leaving out
the traditional process of meeting and interacting with the dispensing optician
face to face. Consequently, Glasses Direct aims to be very competitive on price
with those in the value segment of the market, such as Specsavers. It is
helpful in that context that, being an online business, Glasses Direct does not
have the heavy overheads associated with maintaining and operating retail
premises.
62.
That factor is highly relevant in understanding why the percentage of
exempt supplies claimed by Glasses Direct is much lower than those claimed by
the High Street operators. Mr McGurk suggested that the low proportion of its
supplies that Glasses Direct claimed as exempt, representing the services of
its dispensing opticians (13.4% as opposed to percentages in excess of 60% for
some of the High Street opticians) could be explained by the more limited
services provided by its dispensing opticians as opposed to those operating in
High Street outlets. We find, however, that it is equally explainable on the
basis that Glasses Direct carries out the apportionment by reference to the
employment costs of its dispensing opticians whereas the High Street operators
are likely to operate an apportionment based on the cost of floor space, which
would undoubtedly lead to a higher figure. We therefore find that the
apportionment figure gives us no reliable basis on which we could infer that
the services provided by Glasses Direct’s opticians were on a different scale
relative to its customer base than those of the High Street opticians.
63.
In terms of the current scale of the business, it currently serves
approximately 66,000 customers a year. Net sales last year were around
£5.5million.
64.
Against that background, we can turn to a detailed examination of how
Glasses Direct’s business operates in practice and the role played by its
dispensing opticians.
65.
Mr Hutchfield helpfully explained the role of a dispensing optician and
how it differs from that of an optometrist. The dispensing optician will only
become involved when the patient’s prescription has been issued; it will then
be his task to supervise the translation of that prescription into an optical device
to correct the patient’s defective eyesight.
66.
In the High Street practice the patient will see the dispensing optician
or his assistant and he will be taken through the process of selecting suitable
corrective spectacles. In Glasses Direct’s online model it is common ground
that because of the absence of face to face contact the process is very much
customer driven. However, it is clear that the Glasses Direct website contains
a considerable amount of information which is easily accessible to guide the
patient through the process and at any stage the patient can contact Glasses
Direct for help and advice. The contact number is prominently displayed on each
webpage and on the page on which the patient enters data to personalise his
glasses the following statement appears:
“If you’re not sure you can always call me or one of
our team of opticians, and ask us for clarification on 08456 88 2020 or click
here for an immediate call back Monday – Friday 8 a.m. – 6 p.m.”
67.
Mr Hutchfield explained how the process of “translating” a prescription
into an optical device could at one level be considered a purely mechanical
process of translating numbers into a product. However, he explained that it is
a more complex process than this as the dispensing optician needs to consider
the particular eye care needs of each patient, which can affect a number of
factors. For example, if a patient wished to purchase a specific frame, the
dispensing optician might consider that the selected frame is unsuitable for
use with the lenses needed to correct the patient’s defective eyesight. This
is particularly relevant for strong prescriptions in large frames.
68.
The dispensing optician is not only responsible for ensuring the
physical creation of the prescription glasses, but also providing the patient
with advice and guidance on which glasses are most appropriate to correct
defective eyesight for their individual needs and how to get the most effective
use out of them. This therefore involves professional advice at a pre-sale
stage e.g. information on available lens options such as anti-reflective
coating; explaining to new users how varifocal lenses work and post-sale, e.g.
adjusting glasses for fit; information on how to adjust glasses; advice and
guidance on how to correctly use the glasses and how long it might take to get
used to the new prescription, etc.
69.
These tasks are readily performed when the patient is face to face with
the optician in the High Street outlet. We examine later the extent to which
the dispensing optician’s role is different in the Glasses Direct business
model.
70.
Glasses Direct clearly give close attention to the need to comply with
their regulatory obligations and in particular the requirement that (except in
respect of a supply of single vision glasses of less than 4 dioptres to a
person over 16) prescription glasses must not be sold unless the sale is
effected under the supervision of a registered optician or medical
practitioner.
71.
Mr Hutchfield’s role as sales and service manager includes
responsibility for the clinical standard of care provided to customers by
Glasses Direct’s dispensing opticians and optical assistants under their
supervision.
72.
To assist Mr Hutchfield in carrying out the responsibilities referred to
above, Glasses Direct has established a Supervision Committee, which includes
amongst its members two clinical advisers and ophthalmic surgeons. It is Mr
Bryant’s belief that no other opticians practice has a supervision committee.
The role of this committee is to set the clinical standards for the dispensing
services provided by Glasses Direct’s dispensing opticians and optical
assistants and they do this by authorising and maintaining a detailed
Supervision Requirements Statement some 27 pages in length that governs Glasses
Direct’s operating procedures for dispensing categories of prescription. The
procedures and standards in this document provide amongst other things that:
(1)
The sale of each pair of prescription spectacles must be supervised by
one of Glasses Direct’s dispensing opticians;
(2)
Each of its dispensing opticians has absolute discretion to exercise his
professional skill and judgment as clinicians in respect of each sale for which
he is responsible; and
(3)
There is a minimum level of authorisation and customer consultation
required in each case to ensure that dispensing and supervising standards are
met. Dispensing opticians have the discretion to go further than the standards
prescribed under the Statement but may not do less.
73.
We refer in some respects to the supervision requirements, but we have
accepted that as it is a highly commercially sensitive document, as we were
told that Glasses Direct believes that no other optician has anything
comparable, we avoid direct quotes from the document and refer to its
requirements in generic terms.
74.
Mr Hutchfield’s evidence, which we accept as he has experience of
working with High Street opticians, was that he has not seen anything
comparable to the supervision requirements statement in a High Street practice
nor would it be expected. His evidence was that most opticians do not provide
any guidance at all as to their operational standards,standards;
rather standards and procedures are left to the professional skill and judgment
of each dispensing optician.
75.
Glasses Direct makes available to customers through its website a Quality
Statement which summarises Glasses Direct’s requirements for the supervision of
its sales of spectacles. This is prepared by the Supervision Committee and its
objective is stated to be to ensure high standards of care and best practice in
the industry. It is in effect a summary of Glasses Direct’s requirements for
the supervision of its sales of spectacles. Mr Hutchfield told us that he has
not seen anything comparable in a High Street practice. We will examine these
procedures in some detail later but they can be summarised as follows:
(1)
General supervision: Every order is checked and approved by a
supervising optician before spectacles are sent out. That optician is
responsible for identifying any anomalies or potential problems and has
absolute discretion to exercise his professional skill and judgment as a
clinician over the sale. This includes contacting the customer to discuss the
order where necessary and provide advice.
(2)
Prescription verification: Prescription details are inputted by
the customer. The supervising optician may at his discretion contact the
customer to confirm or verify the prescription.
(3)
Ordering: Where necessary, Glasses Direct seeks details of the
customer’s pupillary distance requirement, that,
that is the distance between the pupils of the eyes. As we shall
see, in most cases Glasses Direct uses an average pupillary distance based on a
survey carried out on 4,000 people.
(4)
Manufacturing: All lenses manufactured are checked by a
dispensing optician and tested with a focimeter to confirm that it matches the
prescription.
(5)
After sales care: A customer care booklet prepared by Glasses
Direct’s supervising opticians is sent out with all spectacles sold which among
other things offers advice on the proper fitting and use of spectacles.
Customers are advised to contact Glasses Direct if they experience any problems
with their spectacles, such as eyestrain. Free consultations may be arranged to
deal with any such problems.
(6)
Additional supervision: In all cases of sales of more high
powered spectacles and of bifocals and varifocals a supervising optician
contacts the customer to discuss the order. In the course of such contact the optician
will advise on lens thickness, lens weight and frame suitability and any potential
intolerance. Pupillary distance measurements are more likely to be requested
in these cases.
76.
As is apparent from the Quality Statement, additional supervision is
required in relation to sales of higher powered spectacles. Glasses Direct
divides sales into 10 categories. Categories 1 and 2 are the most
straightforward sales and covers about 80% of all Glasses Direct’s sales.
Categories 3 to 10 are subject to the additional supervision requirements
referred to above. Glasses Direct does not supply glasses that fall outside these
categories; it believes that such sales do require face to face contact and
more personal attention by a dispensing optician.
77.
As a customer navigates through the website going through the various
stages necessary to make a purchase, there are links to more detailed
explanatory material relevant to the particular stage in question. For
example, customers are given guidance about how to find the right pair of
glasses, how to become accustomed to bifocal and varifocal lenses, the benefits
of having thinner lenses, scratch resistant coating, anti-reflection coating
and UV protection, how to understand the prescription, information on pupillary
distance and how to make minor adjustments to the glasses. This advice and
guidance has all been written by or with the approval of Glasses Direct’s
dispensing opticians.
78.
Customers may order prescription glasses through Glasses Direct’s
website or by telephone. Around 80% of orders come through online orders and
the rest by telephone.
Frame Selection
79.
We assume that the customer starts the purchasing process by visiting
Glasses Direct’s home page. As we have observed, a contact phone number is
shown (at the top of the page) and there is a bar containing various icons
including one named “Find frames that suit and fit”. This will enable the
customer to view a large selection of styles and frames. There is further
material to assist the customer in this, including a “Style Finder” which helps
to narrow the choice and how to choose the right frames for the customer’s
particular face shape. There is also a “Best Fit Machine” which shows how to
measure existing frames a customer has. This would enable a customer to find
frames that closest fit a pair of glasses he already owns. The home page also
contains the following statement:
“Our friendly customer service teams and opticians
here at Glasses Direct are available to help you order your glasses online with
us and along with our fantastic online tools, will ensure you find the right
spectacles for you.”
80.
Mr Hutchfield expanded upon how contact was typically made with
customers. At any stage of the process, customers could contact Glasses
Direct’s dispensing opticians by telephone, email or Live Chat. The call centre
is open 9 a.m. to 5 p.m. Monday to Friday and is manned by four dispensing
opticians and eight optical assistants during those times. Mr Hutchfield’s
view was that by comparison with a large High Street outlet, there would be
around 6 optical assistants who would place 75-80% of all orders and perhaps
one or two supervising dispensing opticians who would walk the floor and
troubleshoot enquiries.
81.
In addition to customers obtaining assistance from the advice on the
website as to how to find the right pair of glasses a significant number of
customers are assisted over the telephone or by Live Chat. For example, we
were shown transcripts of telephone calls where customers were informed about
the suitability of rimless glasses for stronger and thicker lenses or the frame
choice for varifocal lenses. Obviously, when these conversations take place
the customer will not be in the presence of the optician, although, although
the latter will be able to look at the frames in question on the website.
82.
Customers are also able to physically try on a selection of frames using
Glasses Direct’s Home Trial Service which enables customers to try on up to
four frames at home before committing to a purchase. About 35% of orders arise
from customers using this service.
83.
Sometimes the choice of frame is limited by the customer’s prescription.
For example, a prescription of +8 will be incompatible with a rimless frame or
some frames are not suitable for bifocals or varifocals (which account for
around 12% and 10% respectively of Glasses Direct’s orders), because the
vertical height of the frame may be insufficient for the lens. The ‘Style
Finder’ is able to identify frames suitable for a varifocal or bifocal
prescription by assessing the depth of the frame of the glasses. Therefore, if
a customer indicates that they want varifocal or bifocal lenses in the frame,
the Style Finder services excludes frames which have insufficient frame height
that would be unsuitable for these lenses. Even if the customer has not used
the Style Finder, part of the dispensing optician’s review for every order
placed with Glasses Direct includes a check that the selected frame is
compatible with the customer’s prescription. If it is not then the supervising
optician will inform the customer and advise them as to an alternative choice
of frame.
84.
In the High Street outlet, there is a wide range of frames to look at on
the premises and try on and the optical assistant (or less frequently the
dispensing optician) may offer assistance in choosing the frame and can give
advice concerning matters such as suitability for face shapes and lens types
which is available to customers of Glasses Direct through the materials
available online or through direct contact.
85.
In terms of frame measurements, Mr Hutchfield’s evidence, which we
accept, based on his working experience, is that the optical assistant or
dispensing optician will not take any measurements from the customer, the
height and width of the bridge of the nose, the angle to which the sides of the
glasses should be bent around behind the ears or the width of the patient’s
face to enable the optical assistant or dispensing optician to select
appropriate frames for the customer. Although this was found to be the case in
Leightons, stage (iv) (see paragraph 23 above), nowadays opticians offer
such a wide range of frames that suit most people and usually customers are
easily able to find a pair of glasses that fits.
86.
On the Glasses Direct model it is left to the customer to input the
measurements, usually from his existing glasses or by using the Home Trial
Service, assisted by contact with Glasses Direct in some cases. Mr
Hutchfield’s evidence was that the process through Glasses Direct was therefore
comparable to that on the High Street, in that in both cases the customer is an
active participant in the choice of frame and that customers often have a clear
idea of the type of frames they are looking for and, often, the price they are
willing to pay. We accept that assessment.
Intended Use
87.
After the customer has chosen his frames, he will be led to another
stage of the process headed “personalise your glasses” where he provides
additional information about how he intends to use the glasses. This is done
by selecting whether the glasses are to be used, for example, driving, for
distance, solely for reading, solely for computer work (or for reading sheet
music), or less frequently, for use with bifocal or varifocal lenses. Glasses
Direct provides information and guidance on its website to assist customers to
make a decision about which lens types are most suitable for their intended
use, including bifocal and varifocal glasses.
88.
The intended use of the glasses is an important piece of information
(and as such is part of the information reviewed by the dispensing optician
before an order is authorised) because it affects how the lenses are made. As
an example Mr Hutchfield referred to a situation where a customer wished to use
the glasses solely for computer work, but the optometrist did not provide an
intermediate addition (or ADD) value for such use. In those circumstances the
supervising dispensing optician would need to lower the customer’s prescription
strength to enable the customer to have clear vision for computer use at a
slightly longer distance. The degree of adjustment depends on how far away the
customer sits from the computer screen. The same principle applies if the
customer wishes to read sheet music or use a shop till at a slightly longer
distance than normal.
89.
Mr Hutchfield explained that the underlying mathematical calculation to
adjust the prescription is based upon knowledge acquired by dispensing
opticians during their training, including knowledge of anatomy and the optical
properties of lenses. If such adjustments are necessary, the dispensing
optician would discuss them with the customer over the telephone before making
them.
90.
We were shown transcripts of telephone calls with customers during which,
having obtained further information from the customers as to the distance they
worked from their computer screen, or, in the case of a customer working at a
garden centre, the distance from which he looked at the details of plants, the
optician agreed to weaken the prescription to a slight degree.
91.
Mr McGurk challenged the lawfulness of this process, bearing in mind the
restrictions in the Act which appeared to confine jurisdiction over the
prescription to an ophthalmic optician. Enquiries of the Association of
British Dispensing Opticians indicate that making adjustments of the kind
described above by a dispensing optician is permissible and although we were
not shown any direct legal authority for this, we find that it is an accepted
and usual practice.
92.
Where a customer indicates that he needs glasses for both distance and
close up work he may select either bifocal or varifocal lenses to avoid the
need for different spectacles for the two purposes. As an operational
requirement under the Supervision Requirements Statement, a dispensing optician
is required to contact a customer choosing either of those types of lenses to
discuss and check the order and give the customer further information before
approving the order. In particular, for first time wearers of such spectacles
it may be necessary to take the customer through how the lenses work and
explain what to expect from them, and we were shown a transcript of a call with
a customer explaining how bifocals operate and the fact that they may not be
entirely suitable for computer work. We were also shown examples of a call
where, as a result of the dispensing optician’s advice, the customer decided to
select a different lens type to the one initially ordered.
93.
Mr Hutchfield’s evidence, again based on his working experience, which
we accept, was that when purchasing on the High Street a customer would be
asked similar questions about use which, as with the case of the calls we
reviewed, may result in the dispensing optician giving advice as to use and the
appropriate type of lens. We accept, however, that this process is more
customer driven in the Glasses Direct scenario, where Glasses Direct acts
primarily on the information as to use provided by the customer who may have
been guided by the information available on the website. A discussion as to suitability
only takes place where the customer chooses to contact Glasses Direct or where
its Supervision Requirements Statement requires a dispensing optician to
contact the customer.
Lens selection/specification
94.
The next stage in the process under “personalise your glasses” is the
selection of a lens package. There are various categories of lens, a bronze,
silver, gold and platinum package. The components of each package will vary,
from bronze, which is standard thickness and scratch-resistant, through,
through to platinum, which is ultra thin and light,
scratch-resistant with anti reflective coating and UV protection. The customer
has the choice to add reactive and tinted lenses and information is contained
on the website as to how these options can assist clarity of vision. A “See
Clearly Guide” on the website provides further guidance as to when it is
appropriate to use tints.
95.
When the supervising dispensing optician reviews the order, he will
check the suitability of the frame and lens combination selected by the
customer and conveyed electronically to Glasses Direct through the online order
process or verbally for telephone orders. The supervising dispensing optician,
when reviewing the order, may raise any concerns with the customer about the
suitability of the frame and lens combination and advising on appropriate
alternative specifications. This therefore covers some of the ground covered by
Leightons stages (v) and (vi) (see paragraph 23 above).
96.
For example, where the customer has a strong prescription and has
selected a rimless frame, the dispensing optician may advise the customer on what
thickness of lens might be most suitable for the customer’s needs and may
suggest an alternative lens or frame combination. Alternatively, where a
customer with a strong prescription requiring a thick lens has chosen a thin
metal frame, the dispensing optician would advise on the implications of this,
including upon the frame’s resilience.
97.
We were shown transcripts of calls with customers containing advice
given by dispensing opticians in such situations.
98.
Mr Hutchfield’s evidence, based again on his working experience and
which we accept, is that similar advice would be given where necessary face to
face on the High Street and details of lens packages would be provided in
written form on a portable board. Again we accept that not in all cases of a
sale by Glasses Direct would there be a discussion between a customer and a
dispensing optician on the choice of lenses and the suitability of the
frame/lens combination. In category 1 and 2 cases this would only occur at the
customer’s initiative so that the customer would drive the choice, guided if he
felt appropriate by the explanatory materials and advice available on the
website.
Provision of prescription details and other information
99.
The customer is then led to the next page of the site which is headed “Entering
your prescription”. The customer is prompted to enter his prescription
details, which include the Sphere, Cylinder, Axis and Near Addition values for
the right and left eye, the pupillary distance measurement and the prescription
date. The Sphere, Cylinder, Axis and Near Addition values are fundamental
parameters for the dispensing of prescription glasses and are exact
measurements for the individual customer. Customers can also input information
into the “Additional notes for our opticians” box to add any other information
regarding their prescription.
100. Guidance is
available on the website in order to help customers to understand their
prescription, including a stand-alone publication entitled “Understanding your
prescription” which can be accessed by clicking a link on the page. This
publication enables the customer to understand what is meant by Axis, Sph and
Cyl as those terms appear on a prescription and how to translate the
prescription and enter it online. Again this publication is written and approved
by Glasses Direct’s dispensing opticians who are available by telephone, email
or Live Chat to answer any queries that may arise.
101. The dispensing
optician may, at his discretion, contact a customer to confirm the
prescription, ask the customer to provide the original or to verify the
prescription with the optometrist who provided it. In all cases the details
provided will be checked by a dispensing optician for possible errors and
omissions, such as missing values or decimal points in the wrong place. In Mr
Hutchfield’s experience, it is rare for transcribing errors not to be picked up
by the dispensing optician.
102. The supervising
dispensing optician will also review a customer’s previous prescriptions and
orders (if any) to check for inconsistencies and unexplained changes, such as a
significant change in the prescription in one of the eyes or where a prism has
been prescribed. If so, the supervising dispensing optician may feel it
necessary to discuss this with the customer, who may experience difficulties
adjusting to a significant change in prescription.
103. Alternatively,
the supervising dispensing optician may have concerns about the accuracy of the
prescription provided. This may result in the dispensing optician advising the
customer to get a second opinion on the prescription if it was considered that
the reading addition was too high for the customer’s age. We were shown a
transcript of a call with a customer where such a situation was discussed and
the customer was advised to take the prescription back to the optician who provided
it for verification.
104. For orders
falling within categories 3-10 of Glasses Direct’s Supervision Requirements
Statement (around 20% of orders), the supervising dispensing optician will, as
a matter of course, speak to the customer by telephone to go through and
confirm the prescription details. The supervising dispensing optician would use
this opportunity to also ensure that he has all necessary information from the
customer and to confirm information that has already been given. Any other
issues considered relevant by the dispensing optician would also be raised,
such as the intended use of the glasses, the suitability of the lens/frame
combination chosen by the customer, changes to the prescription and issues
relating to particular lens types.
105. As part of the
process for reviewing each order, the supervising dispensing optician may
sometimes need to contact the optometrist responsible for giving the customer’s
prescription. This may arise where there is something missing from or
illegible on the prescription. In addition, the supervising dispensing
optician has discretion to contact the optometrist if he or she feels it is
necessary. If so, he dispensing optician would usually ask the customer for
permission to contact the optometrist.
106. We note that on
the “Entering your Prescription” page the customer is asked to enter details of
his “pupillary distance”. As a general rule, the pupillary distance measurement
is rarely provided on the prescription but it is measured during the eye test
and maintained by the optometrist.
107. As Mr Hutchfield
explained, the pupillary distance measurement does not form part of the
prescription because it is not a measurement of defective eyesight. Rather, it
is the distance between a person’s pupils and, as such, is a measurement
adopted as part of the dispensing process to ensure that the lenses are centred
on the customer’s eyes. The pupillary distance can either be measured
manually, using a ruler, or more commonly using a special machine called a
pupilometer. It can also be measured from a customer’s existing glasses.
108. In about 30% of
orders, customers are able to provide Glasses Direct with their pupillary
distance measurement. In the remaining 70% of orders, where the pupillary
distance measurement is not provided, the absence of the exact measurement is,
in Mr Hutchfield’s view, in about 80% of cases, completely immaterial to the
process of dispensing a pair of prescription glasses, in that it is not a
necessary prerequisite or requirement for the process of selecting the frame
and lens specification. For orders failing within Categories 1 and 2 of
Glasses Direct’s Supervision Requirements Statement (namely prescriptions up to
±5 in strength), which account for about 80% of its orders) they use an average
pupillary distance measurement of 63mm. In almost every instance (over 99% of
cases) where this average is used, in Mr Hutchfield’s experience, there is no
impairment to the quality of optical vision afforded by the prescription glasses.
109. Glasses Direct’s
Supervision Committee came to this conclusion based on a sample of some 4,000
people.
110. In relation to
the less than 1% of Glasses Direct’s customers who experience pupillary
distance problems, it will either create a replacement pair of glasses free of
charge using the accurate pupillary distance measurement by asking the customer
to obtain an accurate pupillary distance measurement from their optometrist, or
if this is not possible, to send in their existing glasses (provided that these
glasses were originally created using an accurate pupillary distance
measurement) from which the customer’s pupillary distance measurement can be
taken. Alternatively, the customer can have a full refund.
111. Any customer in
categories 3 to 10 must provide an actual pupillary distance measurement,
either by obtaining it from the optometrist who carried out his eye test or
sending in an old pair of glasses from which Glasses Direct can take a
measurement using an ophthalmic instrument known as a focimeter. Self-measured
distances are not accepted.
112. Mr Hutchfield
explained that the reason why an accurate pupillary distance measurement is
required in these cases is because there is a higher risk that a customer using
an average pupillary distance measurement might experience discomfort or eye
strain, although it would not cause long-term medical effects. There is more
of a risk, therefore, that the customer would notice a material difference in
optical quality where the pupillary distance measurement is incorrect. Where
anything other than an average measurement was entered by the customer, the
dispensing optician would contact the customer in order to verify it.
113. We observe from
the prescription entering process that it is possible in theory that up to 80%
of all Glasses Direct’s customers could obtain a pair of prescription glasses
without any contact with a dispensing optician. This could be the case where
the customer obtains all the information he believes he needs from the website,
inputs his prescription details correctly, inputs his pupillary distance, if
known, or leaves it to Glasses Direct to use an average distance, needs only
standard lenses or moderate strength and on review of the order the dispensing
optician identifies no issues that he feels necessitates contact being made
with the customer. Indeed Mr Hutchfield accepted in cross-examination that the
vast majority of orders in categories 1 and 2 would proceed without any contact
with the customer.
114. As, unlike the
High Street, Glasses Direct is dependent to a large extent on the information
provided by the customer, it is possible that a category 1 or 2 customer will
receive glasses which are not fit for purpose because he inputs incorrect
information regarding his prescription or the use of the average pupillary
distance figure is inappropriate. Under the Act, a prescription must be no
more than two years old when used as a basis for a supply of glasses so Glasses
Direct takes the customer’s information in that regard on trust. Nevertheless,
if as a result of any of these factors the glasses do not correct the customer’s
vision adequately, there is a generous returns policy and after supply care
services in place which enable the customer to contact a dispensing optician,
explain the problem and either be given advice as how to solve the problem or
be able to provide further information (such as correct prescription details or
pupillary distance) to enable the glasses to be replaced or a refund to be
given. It was fully accepted that there was an inherent risk in Glasses
Direct’s model that customers will be provided with spectacles that do not at
first correct their vision.
115. On the High
Street, where the customer is a purchase-only customer the prescription
information would be manually entered on to the optician’s database. The only
difference with the Glasses Direct model is therefore that the dispensing
optician will be able to verify the prescription there and then and raise any
queries directly with the customer or the optometrist concerned.
Review and Pay
116. Once the
customer has inputted all the details required in the online order process,
which may have involved a telephone or ‘Live Chat’ consultation with Glasses
Direct, the customer is able to review the order in his ‘basket’ before placing
and paying for the order.
Review Process by Supervising Dispensing Optician
117. As explained
above, all information provided by the customer is reviewed by the supervising
dispensing optician before the order is approved for processing. For those
customers who fall into categories 3 to 10 and those customers in other
categories where the dispensing optician at his discretion believes it
appropriate to do so, contact will be made with the customer to discuss his
order before it is approved. Where required under the terms of the Supervision
Requirements Statement (such as where varifocals are ordered or there is a
significant difference in prescription between the eyes), or if considered
necessary by the supervising dispensing optician upon reviewing the customer
order, the supervising dispensing optician will contact the customer and ask
that he sends in his existing glasses in pre-paid packaging. This is to enable
the supervising dispensing optician to take the pupillary distance measurement
and the lens depth measurement. These form part of the customer’s specification
that is sent to Glasses Direct’s laboratory which ‘makes up’ the glasses once
the supervising dispensing optician has completed the review process and
approved the order for processing. Around 6-7% of all customer orders require
customers to send in their existing glasses.
118. There is not an
equivalent stage to this process of review in a High Street optician. According
to Mr Hutchfield, based on his experience, the person who dispenses the glasses
would enter the details on to the system and in a High Street chain he would
expect that person to be an optical assistant in around 75-80% of orders. A
dispensing optician would not, generally, review and approve an order placed by
an optical assistant unless the prescription was a complex one, for example for
a partially sighted customer or a very powerful prescription.
119. In a High Street
optician, the customer may or may not have his existing glasses with him when
seeking to purchase a new pair. However, according to Mr Hutchfield it would
not normally be necessary for the customer to provide an existing pair of the
glasses to the optician, who would instead, take the pupillary distance
measurement and lens depth measurement from the customer face-to-face if needed.
120. Although Glasses
Direct does not take these measurements in person from the customer, they can
do so from the customer’s existing glasses where required. In Mr Hutchfield’s
view it is immaterial whether the measurements have been obtained face-to-face
or by using an existing pair of the customer’s glasses.
Processing of Approved Orders and Quality Control Checks
121. Once the
supervising dispensing optician has reviewed the customer’s order and approved
it, the order is then sent to the laboratory which ‘makes up’ the prescription
glasses (Leightons stage (vii): see paragraph 23 above).
122. Glasses Direct’s
dispensing opticians are also available to give further guidance or advice to
the laboratory in translating the prescription into the prescription glasses to
ensure that the finished product is suitable for the customer’s needs. It
might be that the lens and frame combination that has been requested by the
customer is not available, which may result in the supervising dispensing
optician contacting the customer to recommend an alternative produce.
123. Glasses Direct
produce the simpler lenses in house whereas the more complicated lenses are
manufactured by external laboratories.
124. Mr Hutchfield told
us that the process on the High Street would be very similar. The optician
would send the frames, prescription and any accompanying notes to the
laboratory, which would then make the glasses according to the specification.
The optician will usually send the frames that the customer has physically
tried on in-store to the laboratory.
Quality Control
125. After the
laboratory has ‘made up’ the prescription glasses, Glasses Direct’s dispensing
opticians oversee the next stage of the order process. This is where all parts
of the finished prescription glasses are examined by a quality control
technician under the supervising dispensing optician’s supervision in
accordance with internal guidelines. The purpose of this is to ensure that the
prescription glasses are correctly ‘set up’ prior to dispatch to the customer,
which will in most cases result in a good fit for the customer. The quality
control process involves a number of steps including ensuring that:
(a)
the prescription is correct;
(b)
the side angle is correct;
(c)
the glasses are level on a flat service;
(d)
the nose pads are the correct distance apart and symmetrical on each
side of the nose;
(e)
the sides are the correct length specified, are parallel to each other
and should have a smooth finish behind the ears;
(f)
the head width is correct;
(g)
the lenses comply with relevant standards for Sphere, Cylinder, Axis,
Prism, Addition, and Optical Centres and are secure within the frame;
(h)
the correct lens type and material has been used;
(i)
the lenses are not excessively thick for the frame;
(j)
the coatings have been correctly applied; and
(k)
where tints are present, that these are the correct density and colour.
126. These processes
are, according to Mr Hutchfield based on his own experience, similar to the
processes carried out on the High Street, They correspond to Leightons Stage
(viii): see paragraph 23 above.
Pre-fit
127. If the customer
has sent in his existing glasses, measurements such as the length of the arms
of the glasses, the distance between the nose pads, the frontal angle, the
length to bend, and the bow of the frame are taken (Leightons stage
(iv): see paragraph 23 above).
128. These
measurements enable Glasses Direct to ‘pre-fit’ the glasses to the customer
based on the exact measurements taken from the customer’s existing glasses to
ensure that the glasses properly fit the customer.
129. Mr Hutchfield
told us, based on his own experience, which we accept, that,
that although Glasses Direct does not fit glasses to the customer
face-to-face, the provision of a pre-fit service based on the customer’s exact
measurements produces the same result, i.e. a proper fitting pair of
prescription glasses.
130. Mr Hutchfield
told us, again based on his own experience, that pre-fit adjustment would not
be carried out on the High Street and he would not expect the measurements
referred to in paragraph 127paragraph 127
above to be taken by a High Street optician as a matter of course. Instead,
any necessary adjustments to fit would be made face-to-face when the customer
first selects and tries on the frame or when the customer comes to collect the
dispensed glasses and puts them on to check the fit.
Dispatch to Customer
131. Once the review
and adjustment process has been completed, the prescription glasses are
dispatched to the customer by post.
After-sales care
132. Between 85-90%
of customers do not require any aftercare or adjustments to ensure the proper
fit of their glasses. Clearly, the quality control processes described above,
the use of the Home Trial Service by some customers and pre-fitting where
customers have sent in an existing pair of glasses will help to minimise the
need for aftercare.
133. Most aftercare
issues concern adjustments to the physical fit of the glasses, for example to
the nose pads or arms to the glasses, but generally not the lenses. If
adjustments for fit are needed, a dispensing optician or optical assistant will
talk directly to the customer by telephone to try and resolve the issues by
taking the customer through the necessary steps. This corresponds with Leightons
stage (ix) (see paragraph 23 above) but obviously does not take place face
to face. For example, we were shown a transcript of a call where a customer
was given advice as to how to correct a problem of the glasses sliding off the
face by increasing the curvature of the front of the bridge and making the frames
grip tighter on the side of the head.
134. In addition
there are videos on the Glasses Direct website providing step-by-step
instructions to customers as to how to make adjustments which were contained on
the DVD we were provided with.
135. However, if the
customer is not confident about making any necessary adjustments to fit
themselves as advised over the phone by the dispensing optician or is
unsuccessful in making the modifications himself, he can return the glasses and
Glasses Direct can make the required adjustments for him. In some instances,
if he has not previously sent them in, the customer may also be asked to
provide his existing glasses which can be used as a template for making any
required adjustment.
136. Aftercare may
also be required where the customer is experiencing difficulties adjusting to a
new prescription, for example, varifocal lenses. These are complex lenses that
can sometimes cause dizziness, nausea and/or headaches for first time users and
it might take several weeks before a customer gets comfortable with them. It
those cases a dispensing optician will provide advice and guidance by telephone
or Live Chat.
137. We were shown
transcripts of calls where customers were given advice on how to adapt to
varifocals. Sometimes a problem is diagnosed with the alignment of the lenses
causing distorted vision which will entail the glasses being returned and
replaced free of charge. In one case a customer who could not adapt to
varifocals was offered a replacement of bifocals free of charge.
138. In some cases a
discussion about problems may lead to a change in the frame/lens combination,
or where there has been a large increase in a prescription asking the customer
to be re-examined by an optometrist if he appears intolerant tot the
prescription.
139. On the High
Street any aftercare issues, such as necessary adjustments or problems with
varifocals are addressed in the shop. It appears to us similar advice and
information would be given, the only difference being that it will be provided
face to face which obviously will make it easier, for example, to demonstrate
how to make adjustments or best position the head or body to adapt correctly to
varifocals.
Summary of findings
140. We can now
summarise our findings on how Glasses Direct’s business operates in practice.
We do so by reference to the Leighton stages as appropriate so as to
give a comparison between Glasses Direct’s business model and that operated on
the High Street as follows:
(1)
Glasses Direct does not conduct eye tests. It deals only with customers
who have already had their eye test carried out by an ophthalmologist or
ophthalmic optician who has provided a prescription. Leightons stage
(ii) therefore does not apply.
(2)
A Glasses Direct customer drives the purchasing process himself through
the website, referring as he thinks fit to the various explanatory documents
and guidance material prepared by or under the supervision of Glasses Direct’s
dispensing opticians by telephone, email or Live Chat. On the High Street a
similar process takes place, but it is done face to face with questions being
answered directly by the optician and information provided orally (Leightons
stage (i))
(3)
The Glasses Direct customer inputs his prescription details which are
taken on trust by Glasses Direct. There is considerable guidance available to
customers on how to read a prescription, again prepared by or under the
supervision of dispensing opticians. The material inputted is reviewed by a
dispensing optician and he contacts the customer if he notices any anomalies or
obvious errors or for any reason wishes to discuss or verify the prescription
or advise that it be referred back to the optometrist responsible for it. On
the High Street the prescription is verified face to face. Customers falling
within categories 3 to 10 are as a matter of course contacted by a dispensing optician
to discuss their prescription (Leightons stage (iii).
(4)
The Glasses Direct customer is responsible for measuring the frames he
requires and inputting the required data when placing his order. He may do
this by reference to his existing glasses which he can send to Glasses Direct
who will take the necessary measurements themselves. Detailed advice is
available, again prepared by or under the supervision of dispensing opticians
as to how to measure frames. Customers may also receive up to four types of
frame to try on at home. The customer will be asked to enter his pupillary
distance, if he has it, if not an average will be used in most cases. On the
High Street, measurements for frames (as suggested in Leightons stage
(iv)) are not generally taken as there is a wide range of frames that means most
customers can easily find a frame that fits. The customer generally looks at
what is available on the display in the shop and picks it out for consideration
in conjunction with the optician.
(5)
The Glasses Direct customer chooses his own frames by reference to the
many examples shown on the website, again guided by the explanatory material
and guidance on the website, supplemented by a discussion with the Glasses
Direct optician if necessary. He will also drive the process if selecting the
correct lenses and getting the right style of frame for the shape of the
customer’s face and the type of strength of lenses is important. The
customer’s choice in this regard will be reviewed by the dispensing optician
when he reviews the customer’s order and the dispensing optician will raise any
concerns about the combination selected with him. The principal difference
with the High Street is,is that
unless the customer takes the initiative to contact one of Glasses Direct’s
dispensing opticians, the optician will only be involved if he decides to
contact the customer himself as a result of his review. In all category 3 to
10 cases the customer will be contacted. The Glasses Direct optician will not
have the advantage of seeing the combination on the customer’s face and will
have to visualise it himself. (Leightons stages (v) and (vi)).
(6)
Disclosing the intended use of the spectacles is important; again
guidance on this is available on the website but there need not be any contact
with a dispensing optician in category 1 and 2 cases; the information would be
inputted and it may prompt the dispensing optician reviewing the order to
discuss the matter with the customer. Discussing intended use would feature as
part of the face to face process with the dispensing optician on the High
Street (Leightons stages (v) and (vi)).
(7)
After the customer’s order has been reviewed and any necessary issues resolved
the order is sent to a laboratory for production of the glasses according to the
specifications given. This is the same for Glasses Direct and the High Street
(Leightons stage (vii)).
(8)
On return from the laboratory the manufactured glasses are checked
through by a quality control process under the supervision of a dispensing
optician. A similar process happens in relation to glasses supplied on the
High Street (Leightons stage (viii)).
(9)
Glasses Direct provides after sales care to deal with any fitting issues
or the suitability of the glasses more generally for the customer. This service
is provided through customer contact by telephone, Live Chat or email and may
result in glasses being returned for adjustment or replacement. This process
takes place with the customer face to face on the High Street when he visits
the optician to collect his glasses (Leightons stage (ix)).
141. Ms Shaw
summarised the participation of the Glasses Direct dispensing optician in the
process from the placing of an order (including any preparatory steps) to its
despatch and including any aftercare as follows:
(1)
Creating and reviewing website information to help customers choose the
right frame for their needs and offering other eye care related information by
website, phone and live chat; checking that the selected frame is appropriate
to the customer’s prescription;
(2)
Providing information and assistance to help customers choose the right
lenses for their requirements, including by reference to the intended use of
the glasses by website, phone and live chat; checking and confirming the
compatibility of the customer’s choice with their prescription and intended
use;
(3)
Providing information and assistance to customers to understand their
prescription by website, phone and live chat; verifying prescription
information and reviewing prescription history;
(4)
Reviewing and approving every order;
(5)
Ensuring the finished product is fit for purpose, including quality
control checks and a pre-fit assessment (and additional measuring for specific
prescription types as required); and
(6)
Offering a comprehensive aftercare service by website and phone to allow
any adjustments to be made and generally to ensure that the prescription
glasses are fit for purpose.
We accept this as an accurate
summary and it is consistent with our findings of fact. We observe that the
tasks performed mirror those provided by the High Street optician, the
principal difference being that the services are provided remotely and in many
cases do not involve customer contact at all where the information provided by
the customer is sufficient to enable the optician to approve the order without
the need for any discussion.
IV Issues to be determined
142. Our task is to determine
whether all or any of the services provided by Glasses Direct’s dispensing
opticians as summarised in paragraph 141 above constitute the provision of
medical care within the terms of Article 132(1)()
(c )c) of
the Principal VAT Directive, as implemented by Item 1(b) of Group 7 of Schedule
9 VATA. If we determine that not all the services concerned constitute medical
care we need to determine whetherdetermine whether
those elements that do can be regarded as being ancillary to the standard
supply of the manufactured spectacles with the result that there is a single
standard supply. We must also bear in mind the principle of fiscal neutrality
when coming to a conclusion of those issues.
V Discussion
General
142. We start our
discussion with an observation which we referred to in paragraph 54 above, that
a person needs corrective spectacles because he has defective eyesight. The
diagnosis of that defect, as carried out by the ophthalmic optician and the
production of a prescription, is clearly medical care. It is common ground
that the supply of the glasses that are manufactured according to the
specification set out in the prescription is a standard supply of goods. The
dispute concerns the services of the dispensing optician which translate the
prescription into an optical device (the prescription glasses) which corrects
the diagnosed eyesight and how they are to be characterised, and in ensuring that
the device manufactured is fit for purpose and meets the customer’s needs. It
is accepted by HMRC that where the services are provided on the High Street,
involving the dispensing optician engaging in the nine stages set out in Leightons
then services are characterised as medical care. The work involved cannot
legally be carried out unless it is effected by or under the supervision of a
registered optician. Inevitably, the nine stages of work identified in Leightons
cannot be carried out in the same fashion when a customer deals with Glasses
Direct as would be the case if he visited a High Street dispensing optician
with his prescription in order to obtain a pair of corrective spectacles. HMRC
contend that the differences involved are so fundamental that the character of
the services are changed from being the provision of medical care to the
provision of “professional services” which are to be standard rated for VAT
purposes. Their case rests on two primary submissions as follows:
(1)
Glasses Direct provides none of the services in Leightons stages
(i), (iii), (iv) or (v) to any material extent; and
(2)
The services provided by Glass Direct’s dispensing opticians in relation
to Leightons stages (vi), (vii), (viii) and (ix) cannot amount to
medical care as the services are not provided face to face or do not in any
event have the character of being the provision of medical care.
143. By contrast Ms
Shaw’s primary submission is that the services provided by Glasses Direct’s
dispensing opticians and their purpose is exactly the same as the services
supplied by dispensing opticians on the High Street. In each instance the aim
is to translate the prescription into a pair of corrective spectacles,
appropriate to the patient’s needs. She further submits:
(1)
In dispensing prescription glasses, Glasses Direct makes two separate
supplies, one of dispensing services and one of goods;
(2)
Those dispensing services are properly to be regarded as exempt supplies
of medical care;
(3)
There is no qualitative difference between what Glasses Direct does and
what a High Street optician does in dispensing prescription glasses and
therefore no basis for treating Glasses Direct’s supplies differently from the
supplies made by a High Street optician.
144. We approach
these submissions in two stages. First we examine the extent to which,
contrary to Mr McGurk’s submissions, Glasses Direct provide the services
identified in the Leighton’s nine stages. Secondly, we examine the
extent to which the services so provided constitute medical care.
The services provided
Stage (i) – Seeing the dispensing optician
145. Mr McGurk
submits that Glasses Direct does not provide any of the services mentioned in
stage (i) because none of its customers see a dispensing optician before
placing an order. That is true as far as it goes but we do not believe it is
of any significance. This is merely an introductory stage and is equivalent to
the customer visiting the Glasses Direct website and starting to input his
particulars.
Stage (ii) – The Eye Test
146. It is common
ground that stage (ii) is of no relevance in this case as Glasses Direct does
not undertake eye tests.
Stage (iii) - Taking- Taking
the prescription to the optician who may discuss it with the prescriber
147. Mr McGurk
submits that there is a fundamental difference between the process on the High
Street and that through Glasses Direct at this stage. In particular:
(1)
The inputting of the prescription details (including its date) through
the Glasses Direct website gives rise to a risk of input error and, even,
albeit exceptionally, abuse. It is a system based on trust and
self-certification.
(2)
Verification is sought in only a very small proportion of cases.
(3)
This is in complete contrast with the situation on the High Street where
the dispensing optician will see the original prescription every time and
therefore be in a position to verify it.
(4)
There is no requirement at all for a dispensing optician to contact a
customer who falls into category 1 or 2 (about 80% of all customers) to discuss
their prescription and it is the case that there is no contact in the vast
majority of such cases.
In our view these differences
do not prevent a conclusion that the process is broadly comparable between the
two outlets. In all cases the prescription is reviewed by a dispensing
optician and, as we have found, a Glasses Direct optician has the discretion to
contact the customer and discuss the prescription. For example, if he
identifies anomalies or errors or thinks it desirable to refer back to the
prescriber. Contact will be made in any event in those 20% of cases that fall
into categories 3 to 10. The scope for errors or abuse is in our view of no significance;
the likelihood of a customer deliberately inputting false information in order
to obtain glasses which in these circumstances are unlikely to meet his needs
is so improbable that it should be discounted. If the lack of face to face
contact means errors slip through the net these are likely to be picked up when
the glasses are made and first used by the customer, who would then be able to
make use of the aftercare service. We therefore conclude that Leightons
stage (iii) is present in the Glasses Direct model, albeit in a different form.
Stage (iv) – detailed measurements of the eyes and other features
148. Mr McGurk
submits that this is the key aspect of the dispensing optician’s work that HMRC
believes constitutes the provision of medical care and therefore benefits from
the exemption. He submits this service is provided in all cases on the High
Street. Mr McGurk notes that that Glasses Direct takes no actual measurements
of the customer’s pupillary distance in contrast to the position on the High
Street. He submits that the alternative approach of Glasses Direct, that is to
rely on an average measurement for categories 1 and 2 customers and either
asking a customer in categories 3 to 10 to provide his actual measurement where
he can obtain it from the optician who tested his eyes, or sending in existing
glasses so it can be measured from lenses, is not comparable. He contends that
in effect Glasses Direct rely on and take the benefit of measurements that have
been taken on the High Street. Mr McGurk also submits that where the
dispensing optician is face to face with the customer on the High Street he
will be able to note whether there are any issues with the customer’s eyes that
might call for further testing.
149. In our view Mr
McGurk is confusing the role of the dispensing and ophthalmic optician. Mr
Hutchfield’s evidence, which we accept, was that the pupillary distance
measurement was taken during the eye test. It would therefore have been
available at the time the prescription was handed to the dispensing optician,
on the High Street, or on Glasses Direct model when the customer inputs his
details on the website. Glasses Direct’s explanatory document “Understanding
your Prescription” available on its website states that “many prescriptions
given by High Street opticians do not include a PD measurement as standard”.
This indicates that the prescription does include it in some cases so corroborates
Mr Hutchfield’s statement that it is taken as part of the eye test.
150. A customer of a
High Street optician requiring his actual measurement would therefore be in the
same position as a Glasses Direct customer; he would have to go back to the optician
who conducted his eye test. We therefore find that the dispensing optician on
the High Street is in the same position as the Glasses Direct optician in
relation to this issue; it is a measurement that is required so that the
prescription can be translated into glasses that are fit for purpose. On the
High Street it can undoubtedly be obtained more easily by going to the record
of the eye test; on the Glasses Direct model, recognising that it might be more
difficult to obtain in many cases, Glasses Direct rely on an average adjustment
or one taken from an existing pair of glasses. This process results in the same
outcome, a customer’s glasses are prepared by reference to a pupillary distance
measurement and as in the case with the other details inputted in respect of
the prescription, if there are errors they are corrected as a result of the
aftercare service.
151. Nor do we
believe that there is anything in Mr McGurk’s point about the dispensing
optician being able to examine the patient’s eyes for other issues. In most
cases any issues will have arisen during the eye test, which in the typical
sale on the High Street will have taken place only very shortly before the
dispensing optician is engaged to dispense the spectacles. Mr McGurk was
unable to show that it was a duty of the dispensing optician to examine the
customer’s eyes for evidence of injury or disease.
Stage (v) – advice as to options available in respect of lenses and frames;
examination of existing spectacles
152. Mr McGurk
submits that this process in a Glasses Direct supply is entirely led by the
customer, using the style finder and best fit tool, and the vast majority of
80% of supplies made in categories 1 and 2 the choice can be made with no input
from a dispensing optician whatsoever. In our view Mr McGurk exaggerates the
difference between Glasses Direct’s and the High Street processes. As we have
found, based on Mr Hutchfield’s evidence the choice on the High Street is
largely customer led, with the customer looking at a large variety of frames
which are on display and a portable board giving details of lenses. This is
comparable to the process on the website where the use of the style finder and
best fit tool will narrow down to the correct combination bearing in mind the
fact that certain types of lenses will not be suitable in particular types of
frame. The customer also has the other explanatory material on the website,
initiating advice on how to measure glasses for measurement, the ability to
contact a dispensing optician for advice and the ability to have some frames on
a home trial. In our view the existence of all of these features means that
the process of selection of frames and lenses through Glasses Direct is
comparable to the process that happens on the High Street.
Stave (vi) – drawing up specification for frames and lenses
153. Mr McGurk
submits there is no role for dispensing opticians at this stage on Glasses
Direct’s model. He contends that any measurements applied are the measurements
of other, prior dispensing opticians and as mentioned above, the choice of
lenses and frames is entirely customer driven, with category 1 and 2 orders
being processed usually without consultation except in a small number of cases
where there are anomalies. Mr McGurk also questions the credibility of the
call samples for which transcripts were provided, twenty one in total. He
submits that Glasses Direct have “cherry picked” a limited number of calls to illustrate
conversations that seek to support the points it makes.
154. We reject these
submissions. We have found that in many cases detailed frame measurements are
not taken on the High Street as there is a wide variety of frames to choose
from which are likely to fit. As in the case with Glasses Direct, the
customer’s previous glasses will be available as a guide to measurements and
these may be sent to Glasses Direct so they can be used as a means of ensuring
the new frames are of the right size. The website also allows the customer to
input his own measurements and guidance is given as to how to measure the
bridge and the arms of the frame. We therefore find that the processes of the
two outlets are comparable.
155. With regard to
the call transcripts, there is no reason to believe that a larger sample, say
all the calls received on a particular day, would be any more representative.
The transcripts we were shown deal with a variety of issues including frame and
lens selections, intended use, how to cope with bifocals and varifocals, and
various aftercare issues including making adjustments. As Ms Shaw points out,
the transcripts were available well in advance of the hearing and if HMRC had
an issue as to them being unrepresentative they could have sought a wider
sample of recordings. The calls reveal the kind of discussion that could
equally take place face to face at an optician’s premises on the High Street.
Stage (vii) – Sending the specification to the laboratory
156. It is clear and
accepted that this process is comparable to both outlets.
Stage (viii) – Checking the spectacles conform to the specification after
manufacture
157. Again it is
clear that the process is the same for both outlets.
Stage (ix) – Fitting the spectacles and making any minor modifications
required
158. Mr McGurk
submits that Glasses Direct does not fit the glasses, unlike in the High Street.
They send them out and delegate fitting to the customer. If the fit is wrong,
there are instructions as to how the customer can do it himself (including heat
treatment with a hairdryer). We accept that making adjustments is easier where
the customer is face to face, but in our view the same result is achieved
through the provision of clear guidance on the website or advice given remotely
by telephone, with the option of the customer being able to send his glasses
back for Glasses Direct to be able to make the adjustments for the customer. We
therefore find that the two processes are comparable.
159. We have
therefore concluded that Glasses Direct’s dispensing opticians do provide all
of the services envisaged in the nine stages set out in Leightons, albeit
they are delivered by alternative means to face to fact contact. The fact
that there are many cases where the services are not provided directly in the
sense that glasses can be supplied without any customer contact at all does not
alter the position; the various tools and information available on the website
and the steps that the customer has to take to order his glasses means that the
advice and supervision which is a feature of the High Street practice is
delivered by other means. This is reinforced by the fact that all orders are reviewed
by a dispensing optician before they are accepted and the glasses despatched.
160. We now turn to
the question as to whether the services provided by dispensing opticians at the
nine stages of the process, as identified above, amount to medical care. Mr
McGurk’s primary submission is that the reason the High Street dispensing
opticians do provide medical care is that they personally measure and fit the
customer and in the absence of this feature the services provided by Glasses
Direct’s dispensing opticians cannot amount to medical care. In particular, Mr
McGurk contends that the following services do not constitute medical care:
(1)
Verifying a customer’s prescription is quality control rather than
medical care (stage (iii));
(2)
Dealing with customer enquiries as to the nature of the lens required,
whether add-ons were needed given the intended use to which the glasses would
be put and the lens and frame combination, in particular:
(a)
the nature of the lenses does not alter the prescription that those
lenses contain (and that is true for bifocals and varifocals);
(b)
advice as to the type of lens is purely for going through the most
suitable means by which the customer’s prescription is delivered, relative to
their working or leisure needs or preferences’
(c)
advising on lens/frame combinations is a matter of suitability of use,
what is physically capable of being made and convenience, although he accepts
that there is provision of medical care where a dispensing optician says a lens
is too thick to be applied within rimless frames;
(d)
advice or intended use is not medical care; that a customer may work
outdoors and want scratch resistance coating and UV protection are add-ons that
will enhance the durability of glasses and protect the eyes from the sum;
although he accepts that reducing a prescription, for example, in relation to
computer use (assuming it is permitted) does amount to medical care.
(3)
The steps that Glasses Direct takes to establish pupillary distance
because they rely on information provided by the customer and average
measurements where no other information is provided (Stage (iv));
(4)
Information on the website is no substitute for face to face contact; at
best it might allow a customer to undertake self-diagnosis. No warranty is given
as to the accuracy of the information on the website; it is merely providing
information and not healthcare (stage (v));
(5)
Style, colour and aesthetic factors of glasses do not contribute to the
provision of healthcare;
(6)
None of the customer calls contain advice that amounts to the provision
of medical care as opposed to advice on suitability (stage (vi));
(7)
Stage (vii) is concerned solely with product manufacture;
(8)
The purpose of stage (viii) is purely quality control of a newly
manufactured produced so as to ensure the product is to specification and fit
for purpose; and
(9)
Fitting (stage ix) cannot amount to medical care unless carried out
personally by a dispensing optician.
161. We remind
ourselves that as established in EC Commission v. United Kingdom (see
paragraph 19 above) the supply of corrective spectacles is economically
dissociable from the provision of the service. We do not take Mr McGurk to
dispute that; although HMRC’s position has changed from its original
contentions in its statement of case that the dispensing services in this case
were purely administrative, Mr McGurk now accepts that they are professional
services albeit not amounting to medical care. As we have found that the
delivery of the services is effected in a manner which is comparable to that
provided on the High Street we have no hesitation in concluding that there are
two separate supplies, the supply of the dispensing services (however
characterised) and the supply of the corrective spectacles. In Southport
Vision Plus which revisited the separate supply issue following Card
Protection Plan the clear finding was that customers knew that they have to
pay for the services of the dispensing optician and it was not a service
provided so as to “better enjoy” the optical appliance; it could not be enjoyed
at all without the dispensing service.
162. In our view that
analysis holds good in this case; the services of the dispensing opticians may
be delivered in a different way but the customer will be fully aware of their
significant input into the process. Mr Bryant accepted that selling glasses
online was a ‘tough nut to crack’ because customers are generally aware of the
role of the dispensing optician and regard it as a matter of some comfort. They
may therefore be more wary of a process where the role of the dispensing
optician is more in the background than is the case on the High Street.
However, we have no doubt that those customers who do use the website will have
realised that there is significant input by dispensing opticians; this clearly appears
from the various prompts to make contact to take advice and the explanatory
material that is prepared by or under their supervision. This is against the
backdrop of the regulatory background which requires all retail sales to be
supervised by a dispensing optician. Therefore from the viewpoint of the
typical customer he will see the supply as two distinct and independent
supplies.
163. As to whether
the services concerned constitute medical care, we bear in mind the principles
that we established from our analysis of the authorities set out above and in
particular:
(1)
the fact that there must be a therapeutic purpose: as we have
established the translation of the prescription into the optical advice under
the supervision of the dispensing optician is part of the therapeutic process
of correcting defective eyesight and as established by Verigen (see
paragraph 48 above) a service which is part of the process can qualify;
(2)
the fact that the services are provided remotely does not prevent the
exemption applying: see LuP ( see(see
paragraph 47 above). Accordingly we reject Mr McGurk’s submission that the fact
that the services are not provided face to face means they cannot constitute
medical care.
(3)
There is nothing in the authorities which suggests that the fact that
the dispensing optician does not personally carry out the measuring means that
none of the services amount to medical care. It is clear from both Leightons
and Southport Vision Plus that each part of the service must be examined
separately and a view taken as to whether it constitutes medical care. In our
view the way in which Glasses Direct’s dispensing opticians participate in the
measuring process by preparing or supervising the explanatory material to
assist the customer and the steps taken to establish pupillary distance, albeit
that more aftercare services may result as a result of the lack of face to face
contact, puts these services in no different category from the same services
provided on the High Street.
(4)
We should not confine the exemption to an especially narrow compass.
Bearing in mind the regulatory scheme and the importance of the objective of
the exemption in reducing the cost of healthcare we should give considerable
weight to the fact that Glasses Direct’s business model helps to reduce the
cost of the provision of corrective spectacles as compared with their cost on
the High Street. In addition, we should regard services which are not too
remote from the therapeutic process to benefit from the exemption. We
therefore conclude that all of the matters referred to in Mr McGurk’s
submissions, as detailed in paragraph 160 above, which he contends do not constitute
medical care are so closely connected with the therapeutic process that it
would be artificial to separate them; and in particular there is no basis on
which we should seek to draw a distinction between a quality control process
and medical care when carried out by a dispensing optician.
164. We therefore
conclude that Glasses Direct has satisfied us that all of the services provided
by their dispensing opticians as set out in paragraph 141 above amount to
medical care within the terms of the exemption. Although it is not necessary
for the purposes of our decision we are reinforced in our findings by applying
the principle of fiscal neutrality as set out in Rank. From the point
of view of the consumer who enters the Glasses Direct website and informs
himself as to how the process operates and the significant level of supervision
provided by the dispensing opticians, the differences between the two processes
do not have a significant influence on the decision of the average consumer to
use one service or the other. He will, as we have found, find that their use
is comparable.
165. We allow the
appeals.
166. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. The application must be received by this Tribunal
not later than 56 days after this decision is sent to that party. The parties
are referred to “Guidance to accompany a Decision from the First-tier Tribunal
(Tax Chamber)” which accompanies and forms part of this decision notice.
TIMOTHY HERRINGTON
TRIBUNAL JUDGE
RELEASE DATE: 20 June 2013
