V4.251A Qualifying ships and aircraft

V4.251A Qualifying ships and aircraft

This paragraph considers the scope of zero-rating in connection with 'qualifying' ships and aircraft in VATA 1994, Sch 8, Group 8.

For an overview of the other supplies covered by VATA 1994, Sch 8, Group 8, see V4.251.

In particular this paragraph considers:


    •     zero-rating for the supply, repair, maintenance, modification or conversion of 'qualifying' ships and aircraft1


    •     zero-rating for the supply of parts and equipment fitted in qualifying ships and aircraft2


    •     zero-rating for the supply of safety equipment for use in qualifying ships and aircraft3

Definition of qualifying ship—transport (zero-rating)

For the purposes of VATA 1994, Sch 8, Group 8, a 'qualifying ship' is one which is neither4:


    •     of a gross tonnage less than 15 tons


    •     designed or adapted for use for recreation or pleasure.

Differences between UK and EU legislation with respect to qualifying ships

The UK legislation which provides for zero-rating differs from the EU legislation from which it is derived. Directive 2006/112/EC, art 148(a), (c)5 provides relief for:

'chartering, hire of…vessels used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial or fishing activities…'.

In contrast, the UK provisions relate to the design of the vessel in question, whereas EU provisions refer to the use to which it is put. In the ECJ case of Feltgen6, it was held that 'the exemption from value added tax provided for by that provision does not apply to services consisting of making a vessel available,

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