Repatriation of the dead predominantly a supply of transport

In UK Funerals On-Line Ltd v HMRC [2023] TC08937, the First Tier Tribunal (FTT) decided that the repatriation of dead bodies was a specialist transport service, making it zero-rated for VAT and not exempt as services provided in connection with the disposal of human remains.

• The appellant, operating as Mears Repatriation, provided Services of repatriation of dead bodies, either from abroad to the UK, or more commonly, from the UK to a country abroad.
• Due to the number of requirements that need to be met in order to transport human remains, these services are carried out by specialist providers, of which there are only three or four in the UK.
• Requirements include:
  • Special embalming to comply with international transport regulations (not used in ordinary burials).
  • Transport in zinc-lined coffins (not suitable for burial or cremation).
  • Limited dressing of the body and no inclusion of other objects.
  • A 'Freedom from Infection' certificate for transport.
• The service provided is limited to preparing the body for transport and passing it onto the chosen airline. At this point, the body becomes the responsibility of the airline until it reaches the person taking responsibility in the country of landing. There is no involvement in the funeral arrangements.
• The appellant claimed these services fall within the transportation services set out in Group 8 of Sch 8 VATA 1994 (Zero-rated supplies).
• HMRC believed instead that the services were those in connection with the disposal of human remains as found in Group 8 of Sch 9 VATA 1994 (exempt supplies). They argued that the zinc lining could be removed, people often chose expensive elaborate coffins and were able to visit the deceased in a chapel of rest before transport, which meant these were all part of the funeral arrangements.
• The appellant sought a decision in principle from the FTT. HMRC agreed that if the FTT found that the services could be both exempt and zero-rated, the appellant could choose zero-rated.

The FTT found that:

• It was right to use Network Insurance Brokers v HM Customs & Excise Commissioners [1998] STC 742, as relied upon by HMRC. The FTT used the approach of Moses J and looked at whether the services lead directly to the disposal of the dead (as per Sch 9) or whether they are a step removed from those arrangements.
• The services 'resulted' in the disposal of the dead and so fell within the exempt services of Sch 9.
• The different elements involved in the services gave rise to a complex supply.
• Relying on Gray & Farrar International LLP V HMRC EWCA 121, the FTT sought to establish the predominant element of the supply, taking both qualitative and quantitative elements into account. On that basis, for the typical customer, the predominant element was that of a supply of transport.

The zero rating applied over an exempt rating and the appeal was allowed.

Useful guides on this topic

Mixed supplies: Single or Multiple supply?
 Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?

Place of supply: Services
The Place Of Supply (POS) of a service determines whether the supply is within the scope of UK VAT and whether VAT is payable on that supply.

A beginner's guide to VAT
VAT: Where do I start? What is VAT? Who has to register for VAT? What rate should you charge? How do you calculate VAT? When are your VAT filing obligations?

External link

UK Funerals On-Line Ltd v HMRC [2023] TC08937