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Readers' Forum
Replies to Queries — 2
Carrying out the dead
A client partnership, established for many years, owns a substantial fleet of hearses and limousines that are used by funeral directors when conducting their funerals.
Readers' Forum
Replies to Queries — 2
Carrying out the dead
A client partnership, established for many years, owns a substantial fleet of hearses and limousines that are used by funeral directors when conducting their funerals.
My query concerns the VAT liability on these supplies. Customs Notice 701/32 basically deals with matters from the point of view of funeral directors and undertakers. However, our client is not in these categories, but is (mainly) in the business of hiring out hearses and cars together with personnel to funeral directors and undertakers. There is no end use whatsoever to the family of the deceased person.
My question is whether the service of providing hearses, following cars and personnel — which includes drivers and sometimes pallbearers — is a VATable charge to the funeral directors.
I have tried the Customs telephone helpline countless times without much success and I am getting bewildered by the response. Readers' views would be welcome as I am at a loss to explain it to my client.
(Query T16,453) — Hopeful.
The relevant statute must be the shortest on record — Group 8 of Schedule 9 (Exemptions) to the VAT Act 1994 mentions only the disposal of the remains of the dead and the making of arrangements for or in connection with the disposal thereof.
'In connection with' might seem open-ended, but the VAT tribunal used the interpretation 'directly involved in and concerned with the burial of the dead' in CJ Williams' Funeral Services of Telford (16261) where the undertakers' facilities were made available to other operators.
'Hopeful's case concerns, on the contrary, an inward supply to the funeral director. Customs Notice 701/32 states that, if an undertaker uses a sub-contractor, the sub-contractor's supplies are exempt only if they amount to the supply of a funeral. Otherwise, they are standard rated whether supplied to the undertaker or his client. Such supplies are disadvantageous because section 26, Value Added Tax Act 1994 severely limits the extent (if at all) to which (when converted to input tax) such standard rated VAT can be utilised by the undertaker receiving the supplies. There is no remedy as regards the vehicles, but the services of personnel could perhaps be reorganised so that they function as self-employed operators in direct relationship with the funeral directors. This could be tricky, as found for nursing agency businesses. See, however, Commissioners of Customs and Excise v Reed Personnel Services Limited [1995] STC 588.
