Government’s Change of Heart Over VAT on Doctors’ Fees
The National Association of Funeral Directors (NAFD) moved swiftly to raise concerns over the Government’s intention to introduce VAT on the fees charged by doctors to complete cremation certificates B and C, and is delighted to report that this proposed change in the regulations will not now be going ahead.
When several NAFD members were advised by their local medical centres that doctors’ fees would be subject to VAT at the current standard rate of 17.5% from 1 May 2007, the Association immediately looked into the matter.
Nigel Lymn Rose, the NAFD's Executive Member responsible for Legislation, sought clarification and the Policy Unit of HM Revenue & Customs confirmed in writing that from May 1:
- There would be no exemption for the fees for completion of doctors’ certificates B and C under the health professional's exemption
- There would be no exemption for the fees for completion of doctors’ certificates B and C under the burial and cremation exemption
- The fees for completion of doctors’ certificates B and C would be liable to VAT at the standard rate of 17.5%
Mr Lymn Rose did not accept this interpretation and continued to argue that an exemption was available under the burial and cremation exemption. He maintained that the completion of the doctors’ cremation certificates B and C is a statutory requirement and therefore constitutes part of the services of the disposal of remains of the dead that are specified as exempt supplies.
The NAFD also alerted the All Party Parliamentary Funerals and Bereavement Group to the proposed change. The Group’s chairman, Bill Olner MP, sent an urgent letter to the Rt Hon Gordon Brown MP, the Chancellor of the Exchequer, requesting immediate clarification with a view to blocking such a VAT introduction.
On April 23 the National Association of Funeral Directors received formal confirmation that cremation certificates B and C will remain exempt from VAT from 1 May 2007, such exemption being under Item 2 of Group 8 to Schedule 9 of the VAT Act 1994.
“This is an important issue and one that would have affected all funeral directors, so we are absolutely delighted at the outcome,” says NAFD chief executive officer Alan Slater.
“It is a superb result and represents a key lobbying victory for the National Association of Funeral Directors and a major success for the All Party Parliamentary Funerals and Bereavement Group, thanks to Bill Olner’s direct contact with the Chancellor.”
It is understood that, in light of the ruling by a European Court of Justice VAT tribunal, doctors’ fees will no longer be covered by the VAT exemption for medical services. However, these fees can still be covered by a separate VAT exemption for services provided in connection with burials and cremation.
HM Revenue & Customs is to write officially to the British Medical Association and the National Association of Funeral Directors to clarify the position.