Co-Operative Wholesale Society Ltd v Commissioners Of Customs & Excise

For VAT purposes, the contractual recipient of a promise to provide funeral services may differ from the persons who ultimately receive those services. Where the supplier provides the fund only with a promise, the supply is not itself a Group 8 burial or cremation service. It may instead be an insurance service under Group 2, or fully taxable if that exemption is not claimed. Where the supplies are treated as made to members’ estates, funeral services personally provided by the supplier fall within Group 8, but facilitating and administering the use of alternative funeral directors does not. On that analysis, the distinction between one composite supply and separate supplies may not require determination.

Co-Operative Wholesale Society Limited appealed against Keene J’s dismissal of its statutory appeal from a VAT Tribunal decision. The assessments concerned payments received under agreements with Leeds Hospital Fund Limited, under which the Society undertook to provide or arrange funeral services for Fund members.

The Commissioners assessed VAT on the additional payments relating to arrangements with alternative funeral directors. The Society argued that the agreements involved one exempt composite supply. The central issues were the identity of the recipient of the supplies, the scope of the Group 8 exemption, and whether the arrangements constituted one supply or separately assessable supplies.

Keene J’s decision was reported at [1999] STC 1096.

Appeal dismissed with costs.

1. The Court of Appeal identified two possible analyses. If the supplies were made to the Fund, the Society supplied promises to provide services in specified circumstances. That was not a supply of burial or cremation services within Group 8 of Schedule 9 to the Value Added Tax Act 1994. The promise might qualify as insurance under Group 2, but no such exemption was claimed.

2. The insurance characterisation was supported by Card Protection Plan Limited v Customs & Excise Commissioners [1999] STC 270. The Society received payments in advance and undertook, on the occurrence of death, to provide or facilitate the agreed service. The Fund itself received only the promise; the funeral services were supplied to members’ estates.

3. The Commissioners’ revised analysis was preferred. For VAT purposes, the supplies were treated as made to the estates of deceased members. Funeral services personally provided by the Society were therefore exempt under Group 8. Where an estate selected an alternative funeral director, however, the Society supplied facilitation and administration services, not funeral services. Those services were not sufficiently proximate to the exempt supply.

4. The Court relied by analogy on Network Insurance Brokers Ltd v Customs & Excise Commissioners [1998] STC 742, where brokerage services were held insufficiently proximate to the supply of funeral services to attract exemption.

5. The Society’s argument that the payments represented one indivisible supply consequently failed. The assessments, which concerned the non-exempt payments, were not challenged as to quantum. Under section 6(4) of the Value Added Tax Act 1994, the supplies were treated as taking place when payment was received.

• Court of Appeal (Civil Division): appeal from Keene J’s dismissal of the Society’s statutory appeal. The appeal was dismissed with costs.
• High Court: Keene J dismissed the statutory appeal; the decision is reported at [1999] STC 1096.
• VAT Tribunal: dismissed the Society’s initial appeal against the VAT assessments.