HM Customs and Excise Notice 744C explains the zero-ratings for
ships, aircraft and associated services provided under Group 8
(Transport) of Schedule 8 (Zero Rate) to the Value Added Tax Act 1994.
This notice can be found on the web at:-
http://www.hmce.gov.uk/forms/notices/744c.htm#top
Some of the salient points of the notice are printed below:-
1.1
This notice explains the zero-ratings for ships, aircraft and
associated services provided under Group 8 (Transport) of Schedule 8
(Zero Rate) to the Value Added Tax Act 1994.
1.2
The guidance in this notice is not part of the law and does not
override it. It reflects only the interpretation of the law and current
practice by Customs and Excise.
Remember,
the lists of examples are not exhaustive. If you are in any doubt about
the VAT liability of your own supplies, please check with your local VAT
Business Advice Centre.
2.1
Zero-rating for the supply of ships and aircraft
1.
The supply, repair or maintenance of a qualifying ship or the
modification or conversion of any such ship provided that when so
modified or converted it will remain a qualifying ship.
2.2
"Qualifying" ships and aircraft
A
"qualifying ship" is any ship of a gross tonnage of not less
than 15 tons which is neither designed nor adapted for use for
recreation or pleasure.
2.7
Zero-rating of ships
Item
1 of Group 8 zero-rates the supply, repair or maintenance of a
qualifying ship or the modification or conversion of any such ship
provided that when so modified or converted it will remain a qualifying
ship.
A
ship’s normal fixed and loose equipment and furnishings necessary for
its operation, navigation or safety, are treated as part of the supply
of a ship if they are supplied with it under the same contract. An
initial normal complement of on-board spares is treated in the same way.
(See
section 3) for details of supplies of ship repair, maintenance,
modification or conversion).
2.8
What is a "ship" for the purposes of Group 8?
For
the purpose of Group 8, "ship" includes -
Barges,
Submarines; hovercraft; light vessels; fire floats; dredgers……..
For
the purpose of Group 8, "ship" excludes -
Vessels
which are permanently moored (e.g. as attractions) and not readily
capable of navigation.
2.9
Measurement of gross tonnage
Any
ship which has a gross tonnage of less than 15 tons is not a qualifying
ship for the purposes of zero-rating under Group 8. The gross tonnage of
a ship is as ascertained under the Merchant Shipping Acts. If the gross
tonnage of a ship has not been ascertained under the Merchant Shipping
Acts you should read Appendix A. Hovercraft are not subject to the gross
tonnage criteria and are therefore regarded as qualifying
"ships" unless they are designed or adapted for use for
recreation or pleasure - see below.
2.10
Ships designed or adapted for recreation or pleasure
Item
1 also excludes from zero-rating any ship which, although 15 tons or
over, is designed or adapted for use for recreation or pleasure.
Therefore, private pleasure boats or yachts are not zero-rated under
item 1 even if supplied for business use (for example, sail training).
4.1
Zero-rating of parts and equipment for qualifying ships and
aircraft
2A
the supply of parts and equipment, of a kind ordinarily installed or
incorporated in, and to be installed or incorporated in, -
(a)
The propulsion, navigation or communication systems; or
(b)
The general structure
Of
a qualifying ship or, as the case may be, aircraft.
2B
The supply of life jackets, life rafts, smoke hoods and similar safety
equipment for use in a qualifying ship or, as the case may be, aircraft.
4.2
What are the conditions for zero-rating?
To
qualify for zero-rating, the parts and equipment must be:
(a)
of a kind ordinarily installed or incorporated in the propulsion,
navigation or communications systems, or the general structure of a
qualifying ship or aircraft; and
(b)
For incorporation or installation in a qualifying ship or
aircraft; and
(c)
If your customer is a Government department, installed or
incorporated:
In
the course or furtherance of a business carried on by that department;
or
In
qualifying ships or aircraft used for providing rescue or assistance at
sea.
4.3
Which parts and equipment qualify for zero-rating?
The
following are examples of parts and equipment which may be zero-rated,
provided they meet the conditions set out in paragraph 4.2 above. This
list is not exhaustive but before zero-rating any other parts you are
advised to consult your local VAT Business Advice Centre.
-
Anchors;
-
Catering
equipment (industrial);
-
Components
to be fitted inside a ship or aircraft such as:
- electrical equipment;
- navigation equipment;
- video and similar entertainment;
- equipment incorporated into airline seats;
-
Cranes;
-
Fishing
nets and equipment;
-
Fixed
equipment to control, operate or launch weapons;
-
Laundering
equipment (industrial);
-
Lifeboats
and life rafts;
-
Propellers
and rudders;
-
Pumps;
-
Radar
and navigation equipment;
-
Safety
equipment such as:
- escape chutes;
- life jackets;
- smoke hoods;
- oxygen masks;
- winches;
-
Nuts,
bolts, hoses, oil seals and rivets (referred to as
"consumables" by the aircraft industry);
-
"Expendable"
parts and "rotable" components used by the aircraft
industry;
-
Communications
equipment used for the operation of the ship or aircraft;
-
Sanitary
fixtures.
4.4
Parts and equipment excluded
Any
raw or bulk materials, partly processed parts or equipment, and also
non-specialist goods or appliances are excluded from zero-rating.
Examples:
(This list is not exhaustive.)
-
Binoculars;
-
Catering
equipment (domestic);
-
Crockery;
-
Cutlery;
-
Diving
equipment;
-
Furniture
(unfixed);
-
Laundering
equipment (domestic);
-
Missiles,
shells etc.;
-
Ship's
stores;
-
Soft
furnishings;
-
Telephones;
-
Televisions;
-
Tools;
-
Underwater
cameras;
-
Videotapes,
video games and similar entertainment equipment;
-
Crockery
and cutlery;
-
Raw
materials:
- fibre board;
- plastics;
- specialist metals;
-
Bulk
materials:
- adhesives;
- chemicals;
- fabrics;
- inhibitors;
- metals;
- oils;
- paints;
- solvents and thinners etc.;
-
Aircraft
ground equipment;
-
Flight
simulators or their parts;
-
Tooling
and equipment used for manufacturing parts or equipment
<<<
Back DIY
Fit-out cost >>>
Next Page - Barge Insurance Info
Created
28th October 2003
- Last
updated
25 January 2009