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VAT is zero rated on many barges.
To be zero rayed, HMRC state that it has to be a qualifying ship and
designed and used as a permanent residential accommodation by owners.
A
‘qualifying ship’ is zero-rated for VAT purposes, which means
that it’s VAT-free when you buy it in the UK. And when you want to do
some work on it, unlike a conventional house, supplies of most parts and
equipment are also VAT-free, as are repairs, maintenance works,
modifications and conversions. Vessels of less than 15 gross tons can
never be zero-rated, so most narrow boats, even if they are used as a
home, will be standard-rated.
HMRC issued a brief (38/09) dated
8th July 2009 concerning VAT on Dutch barges and similar vessels
designed for and used as permanent residential accommodation by owners.
VAT is now zero rated on these residential qualifying barges and also
retrospective on previous builds, but can only be claimed back via the
barge builder. HMRC state that:-
'Qualifying ships' - are
zero-rated for VAT purposes. A 'qualifying ship' is defined as a ship
which is not less than 15 gross tons and is neither designed nor adapted
for use for recreation or pleasure. The law is set out in the Value
Added Tax Act 1995, Schedule 8, Group 8, Item 1 and legal note A1(a).
'Houseboats' - are
covered by a separate zero-rate. For VAT purposes, 'houseboats' are
boats designed as living accommodation that do not have, and cannot be
fitted with, a means of propulsion. If a boat can be fitted with a means
of propulsion, it is not a 'houseboat'. The law is set out in the Value
Added Tax Act 1995, Schedule 8, Group 9, Item 2.
See
http://www.hmrc.gov.uk/briefs/vat/brief3809.htm
An interesting article / blog regarding
VAT on barges by Solicitor and tax specialist Ann L Humphrey and can be
read here
http://www.annlhumphrey.com/content/bon-voyage
For the latest on New Build VAT see the
Barging.co.uk
Message Board Forum
For info.... Up until December 2004
many barge builders supplied barges at zero rated VAT. This was
deemed possible because they came under the 'qualifying ship' category, eg. 'as
a ship which is over 15 gross tons and is neither designed nor adapted
for use for recreation or pleasure'. However HM Customs issued a business brief in December 2004, clarifying the
VAT liability (although the actual law did not change, just the
clarification). From then on it appeared that the only way a new build
barge could be zero rated was if it were 'deigned' for commercial use, with
built in hold, however appeals were made, and won, and further
clarifications made by HMRC. For latest updates see barge
Message Board Forum
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Last
updated
31 January 2012
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