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In the First-Tier tribunal (FTT) case of Hodge and
Deery Limited the issue was whether ground
works preparatory to installing flexi vault burial chambers exempt via The VAT Act
1994, Schedule 9, group 8, item 2 – “The making of arrangements for or in
connection with the disposal of the remains of the dead.”
Background
The vaulting system was installed
in graveyards with unstable soil structures which can result in issues with toxins
and in subsidence of an existing grave when another grave is dug in the
adjacent plot. The burial plots are ready for use and the element above the
plots is landscaped (which was undertaken by a third-party).
The appellant’s case
The appellant considered that the
installation of the flexible burial vaults should be treated as the advance
digging of multiple graves. It should not be regarded differently from the
preparation of “normal” graves. The sole
purpose of the preparation of a grave is to dispose of the remains of the dead
and it should not matter that the undertaker does not prepare the grave
himself.
HMRC’s case
HMRC considered that the installation
of flexible burial vaults do not fall within the exemption because:
- item 2 must be construed to confine the exemption to those supplies directly involved with the disposal of the remains of a particular dead person
- item 2 is confined to supplies directly made by the funeral director with care and custody of the deceased. It does not extend to sub-contractors of the funeral director
- the appellant had no responsibility for the deceased
- although the availability of zero rating in connection with the provision of new housing can be available to sub-contractors involved in the supply of new housing, this exemption cannot extend to sub-contractors in the same way, as the sub-contractors cannot be concerned with the body of the deceased
Decision
The judge considered that the
services resulted in the provision of many graves for the disposal of the
remains of the dead and that the result of the services satisfied the object of
the exemption. The digging of graves is central to the disposal of the remains
of the dead, the services are made in connection with the disposal of the
remains of the dead and within Item 2.
Commentary
In this case, it did not matter
that the services are provided in advance, and nor did it matter that the
services are not provided in connection with a specific funeral. It also
confirms that the funeral director or undertaker need not provide all the
services themselves. It seems obvious that the digging of graves is pivotal to
the disposal of the remains of the dead and once it was established that a third
party could dig the grave, the appeal was bound to be successful.