Aircraft and ships – modification, repair and conversion, etc

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Aircraft and ships – modification, repair and conversion, etc
  • Maintenance, modification and conversion
  • Repair and maintenance of parts and equipment
  • Parts and equipment used in qualifying aircraft and ships
  • Supplies to government departments and the Scottish Administration
  • Handling of ships and aircraft
  • Other services
  • Supplies by intermediaries
  • Ship managers and port agents
  • Aircraft management
  • Evidence that the ship / aircraft is ‘qualifying’

This guidance note provides an overview of the zero-rating provisions that apply to the conversion, maintenance, modification and repair of aircraft, ships and their parts. This note should be read in conjunction with the Aircraft and ships guidance note.

Maintenance, modification and conversion

VAT Notice 744C ; VATA 1994, Sch 8, Group 8, items 1 and 2; VTRANS111000; VTRANS120000; 2006/112/EC , Article 148; De Voil Indirect Tax Service V4.251 (subscription sensitive)

Maintenance includes the following types of services:

  • cleaning
  • fumigation
  • ships laundry that is not of a personal nature for the crew or passengers
  • tests of components and parts

Modification and conversion includes the following types of services:

  • lengthening the vessel
  • rebuilding work
  • structural alterations to the vessel
VAT treatment

The following provides an overview of the VAT treatment of the main types of modification, maintenance and conversion works that could be undertaken in connection with a vessel.

Zero-rated workStandard rated work
repair and maintenance of a qualifying ship providing all of the relevant conditions are metrepair and maintenance of a non-qualifying ship or a qualifying ship where the relevant

More on Zero-rated supplies: