Background and law: Sub-contracted services
If a service is provided to the principal by a third party undertaker in connection with the arrangements for or in connection with the disposal of the remains of the dead, the supply will be exempt. For example, if an undertaker were to offer his mortuary to another undertaker for the storage of a body before a funeral, it would be an exempt supply. The service of storing the body is the making of arrangements for or in connection of the disposal of the dead.
Exemption also applies to services supplied by a person acting in the capacity of an undertaker, provided they directly involve the disposal of the deceased. For example, a person may provide a specialist service, such as a custom built horse drawn hearse and driver to transport the deceased to the cemetery or crematorium.
In C J Williams’ Funeral Service of Telford VTD 16261, the Tribunal observed that the exemption in UK law … was consistent with EC law … when construed as encapsulating the kind of activities carried out by an undertaker (Network Insurance Brokers Ltd v C&E Comrs  STC 742 … ). The Tribunal held that the appellants’ activities in providing cold storage facilities and the use of their chapel of rest to other undertakers were exempt as the making of arrangements for or in connection with the disposal of the remains of the dead. Those services were the kind of activities carried out by an undertaker. It made no difference whether the principal undertaker carried out all the arrangements himself or subcontracted some of them to another undertaker.
Where the bereaved family contracts two undertakers because, for example, the deceased has to be moved from the place of death to a crematorium or burial ground in a different part of the UK, both supplies will be exempt. This is because both undertakers have made arrangements for, or in connection with, the disposal of the remains of the dead.