Death and taxes: installation of burial vaults exempt from VAT

In Hodge and Deery Limited v HMRC [2022] TC08484, the First Tier Tribunal (FTT) found that a company installing pre-formed burial vaults was making an exempt supply for VAT purposes.  

• Hodge and Deery Limited (Hodge) provided services to RED Landscapes whereby Hodge installed pre-formed burial vaults in a 20-acre burial site in East London.
• RED Landscapes had contracted with the company operating the burial site to provide flexible burial vaults and landscape services.
  • Pre-formed flexible vaults represent the new technology in the context of preparing graves in unstable soil areas. They are used rather than brick retaining walls installed in each individually dug grave.
• HMRC’s position was that the Services supplied by Hodge were not exempt from VAT as the exemption should be limited to supplies made by the appointed funeral director.
• Hodge disagreed and Appealed to the First Tier Tribunal (FTT).

The FTT allowed Hodge’s appeal, finding that the supply it made was exempt from VAT.

• To be exempt, under Group 8, Schedule 9 of the VAT Act 1994, the services supplied must directly lead to, or be in connection with, the disposal of the remains of the dead.
  • In addition, the services must be of a type normally provided by undertakers.
• The digging of graves is central to the disposal of the remains of the dead.
  • It followed that Hodge’s services were made in connection with the disposal of the remains of the dead.
• It did not matter that the services were:
  • Provided in advance.
  • Not provided in connection with a specific funeral.
• The new technology’s purpose is the same as the old technology. It made no difference that the modern method of dealing with unstable soil requires the advance preparation of multiple graves.

Useful guides on this topic

Partial exemption & input VAT
How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?

Goods or services for VAT?
What are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.

VAT Toolkit
This is our summary version of HMRC's output and input VAT toolkits, our version includes more detail, topics and planning points.

External link

Hodge and Deery Limited v HMRC [2022] TC08484