VAT on funeral car hire ?

VAT on funeral car hire ?

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My client runs a garage as well as hiring out a hearse and limousine to funeral directors / undertakers.

He has always charged VAT on these hire costs in the past as VAT notice 701/32 section 3.3 lists:-

"Hire of vehicle with driver to an undertaker by someone who is not an undertaker" as a standard rated supply.

In the same notice "hire of hearse with driver from one undertaker to another" is stated to be exempt but my client is not an undertaker. He calls what he does "acting as carriage master". He provides the vehicles and drivers. The drivers act as bearers but apart from that my client has no other involvement with the funeral arrangements.

Over the past few years other firms in a similar position have stopped charging VAT on the vehicles they hire out and my client has recently had an invoice returned from one of his customers stating he should not be charging VAT as they say VAT "is not applicable for funeral expenses".

Are they correct ?

If so, what are the key deciding factors ?

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By Steve Kesby
23rd Nov 2011 14:05

Thank you...

... I've never even looked at Notice 701/32 before!

It seems to me that the nature of the contractual relationships and supplies involved are:

the undertaker is engaged by the deceased's PRs to prepare the body, transport it to a place of disposal, and dispose of it.your client is engaged to provide the vehicular means (car and driver) to transport the body from A to B.

Personally, I'd agree with Notice 701/32.

It is certainly not correct that "VAT is not applicable to funeral expenses".  Supplies of the disposal of the remains of the dead and making arrangement for or in connection with such disposal are exempt.  Your client is making a supply of standard-rated transport for the purposes of the undertaker's exempt supply of transporting a corpse from A to B.  IMHO.

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