Commemorative masonry is VAT zero-rated

Posted: 11th March 2013

In a significant decision for cemetery owners, the first-tier tribunal has ruled that urns, vases and plaques put immovably in place to commemorate the dead are zero-rated for the purposes of Value Added Tax (VAT). The decision establishes that, so long as such masonry is solidly fixed in one position, it benefits from the exemption from VAT contained within group one of schedule nine of the VAT Act 1994.

Cemetary 1Sandwell Metropolitan Borough Council operates cemeteries and memorial gardens within its area, providing a range of commemorative masonry to grieving families from simple plaques to impressive pink granite vaults. The council’s agreement with the bereaved is that such memorials will remain in place for at least 10 years.

The agreements take the form of leases of the spaces in which various memorials are placed and the council argued that the rights it grants to mourners are exempt supplies of land. However, Her Majesty’s Revenue and Customs (HMRC) submitted that the council was making supplies of ‘commemorative focal points’ which should be viewed as standard rated for the purposes of VAT.

Allowing the council’s appeal, the tribunal noted that the primary wish of mourners is to have a particular space that can be identified with the deceased. A memorial, be it ever so grand, would not be acceptable to a typical mourner if it could be moved around at the whim of the cemetery’s owner. The supplies took the form of letting of immovable property and conferred upon tenants the right to occupy and exclude others from the space in which memorials stand.

The tribunal accepted the council’s arguments that the provision of a plaque or other memorial should be viewed as ancillary to the provision of a fixed space identifiable with the deceased. However, the tribunal ruled that the VAT exemption could not be extended to less securely fixed memorials, including plaques placed on stakes in a rose garden, due to their lack of permanency.