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Local Authorities potential to reclaim VAT

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28th February 2013

The Tax Tribunal has recently heard a test case brought by a Local Authority against HMRC relating to cemetery memorial charges. The council involved has over £1m of VAT and the First Tier Tribunal has sided with the council in its case.

Sandwell Council had argued that it was incorrect to collect VAT on personal memorials where they were clearly connected with cremated ashes of a deceased person. HMRC had argued that the memorials were a focal point for remembrance and as such should be subject to VAT. The Tribunal agreed with HMRC insomuch that they are a focal point, but considered that the bereaved wanted a fixed location they could identify with the deceased. As such, the Tribunal considered this to be an item of immovable property, and any standard rated works that took place such as engraving of the memorial were an incidental part of the supply.

As the £1m that Sandwell is looking to reclaim shows, the values involved are not small, and it would be worthwhile looking at putting a claim in to cover the last four years for all local authorities. Whilst HMRC may still appeal the Tribunalís decision to a higher court, capping rules would limit any reclaim possibility if an authority delayed.


About the Author

The VAT People are leading VAT and Customs Duty consultants based in the North West of England. We work with a wide range of businesses throughout the UK as well as assisting our accountancy colleagues to unravel the thorny VAT issues for their clients. We are one of the UK's largest and most comprehensive sources of VAT and Customs advice, our consultancy team having over 140 years of experience in VAT and Customs gained in either HMRC or a Big 4 accountancy practice environment.

Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.



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Article Published/Sorted/Amended on Scopulus 2013-05-18 11:13:35 in Tax Articles

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