In determining the correct VAT treatment of particular goods or services, specialist tax tribunals immerse themselves in multifarious aspects of UK business life, from the mundane to the more unusual. One such case concerned a company that specialises in the repatriation of bodies.
The company’s principal business is the repatriation by air of bodies from the UK to other countries. Its customers are almost always the deceased’s next of kin, whom it relieves of the physical and administrative burden of arranging repatriation. Its role, however, ceases once the body is on board an aircraft and it plays no part in funeral or disposal arrangements in the destination country.
The company contended that it is primarily in the international transport business and that its services should thus be zero-rated for VAT. It pointed out that transporting bodies by standard postal or courier service is illegal and that airlines view human remains as goods or cargo rather than passengers.
HM Revenue and Customs, however, argued that the company is involved in making arrangements for, or in connection with, the disposal of the remains of the dead, a service which is exempt from VAT, rather than zero-rated. Given that impasse, the First-tier Tribunal (FTT) was asked to provide an authoritative answer as to how the company’s services should be treated for VAT purposes.
Ruling on the matter, the FTT noted that the company offers its customers caskets ranging in price from £550 to over £21,000. It also provides an embalming service, although the company contended that this was required for international transport purposes. The type of embalming it performed was not the same as that which would ordinarily be carried out in the context of a domestic funeral.
The FTT agreed with the company that the predominant element of its business is the supply of specialist transport services. Its typical customers were looking primarily for a business that could arrange transport of a recently deceased relative to a country of their choice.
The fact that the value of caskets supplied by the company might exceed that of all other elements of the supply did not change the qualitative nature of the services provided. The FTT concluded that those services are, for VAT purposes, zero-rated.