VBURC2300 - Background and law: Scope of the exemption

HMRC has always regarded the law as applying only to the essential goods and services that an undertaker or crematorium has to supply in order to dispose of the remains of the dead.

Case law

In Network Insurance Brokers Ltd. [1998] STC 742, it was found that the exemption within item 2, Group 8, for "the making of arrangements for or in connection with the disposal of the dead" was confined to the kind of activities performed by undertakers which lead directly to the disposal of the remains of the dead, rather than to funeral services in general.

In applying the reasoning of the Network Insurance Brokers decision, the Tribunal chairman in CJ Williams of Telford VTD 16261 stated

"I find that there is a continuous process in the making of such arrangements for or in connection with the disposal of the remains of the dead, which encompass the initial picking up of the body by an undertaker, the transportation to an undertaker's premises of the body, the storage of that body in cold storage, the embalming of the body if required, the supply of the coffin, the display of the body and the transport of the coffin and body to the place of disposal, and other such services as are essential to the funeral."

This is a fairly narrow interpretation. It allows undertakers and crematoria to exempt their services of burial and cremation, and the arrangements that have to be made to provide those services. There is no definitive list of such arrangements, but they will all involve the custody or care of the deceased. The supply of goods that are incidental and closely related to these services is also exempt.

The exemption does not include supplies of, for example, wreaths and headstones which, although traditionally associated with funerals, are not directly related to the actual disposal of the remains of the dead to be covered by the exemption.

However, the supply of a live web stream of the actual funeral service, burial or cremation will fall to be treated as exempt from VAT under Item 2 to Group 8, Schedule 9 of the VAT Act.