Commentary

V16.932 VAT—supply of parts and equipment in the course of construction of qualifying ships and aircraft and supplies in the course of repair, maintenance, modification and conversion of qualifying ships or aircraft

Part V16 Forms and other HMRC material

V16.932 VAT—supply of parts and equipment in the course of construction of qualifying ships and aircraft and supplies in the course of repair, maintenance, modification and conversion of qualifying ships or aircraft

V16.932 VAT—supply of parts and equipment in the course of construction of qualifying ships and aircraft and supplies in the course of repair, maintenance, modification and conversion of qualifying ships or aircraft

Information Sheet 15/07, November 2007

This Information Sheet should be read in conjunction with September 2005 edition of Notice 744C (Part V8).

1 Introduction

This Information Sheet clarifies HM Revenue and Customs (HMRC) policy on the VAT liability of:

  1.  

    —     the supply of parts or equipment to be used in the construction of a qualifying ship or aircraft,

  2.  

    —     supplies in the course of repair, maintenance, modification or conversion of qualifying ships and aircraft, including supplies of parts and equipment.

2 Supply of parts and equipment in the course of construction of a qualifying ship or aircraft

The supply of certain parts and equipment to be installed or incorporated in qualifying ships and aircraft is zero-rated.

In 2005, in the case of QED Marine, LON/01/05, VAT Decision 17336, the VAT & Duties Tribunal decided that a ship did not become a qualifying one until it became seaworthy and that the supply of parts up to that time were therefore standard-rated.

This decision was reflected in paragraph 4.5 of the September 2005 edition of Notice 744C (Part V8).

In the light of this decision, HMRC considered withdrawing the zero-rating of

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