Freight transport and related services ― zero-rating

Produced by Tolley
Freight transport and related services ― zero-rating

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

  • Freight transport and related services ― zero-rating
  • When can freight transport services be zero-rated?
  • When can services related to freight transport be zero-rated?
  • Services provided in connection with ship, train and aircraft cargo
  • Services in connection with imports and exports
  • When can intermediary services in connection with freight transport and related services be zero-rated?
  • How do the rules apply to freight forwarders?
  • Practical points ― freight transport and related services

This guidance note looks at the scope of VAT relief for freight transport and related services when the place of supply of those services is the UK. It also looks at VAT relief for intermediary services connected with these kinds of supplies.

For the place of supply of freight transport and related services, see the Place of supply of services ― freight transport and related services guidance note.

For an overview of zero-rating generally, see the Zero-rating ― overview guidance note.

For in-depth commentary on the legislation and case law in this area, see De Voil Indirect Tax Service V4.251.

When can freight transport services be zero-rated?

The transport of goods from within the UK to a place outside the UK is zero-rated to the extent that the place of supply is the UK. The same is true of the transport of goods from a place outside the UK to the UK.

So, for example, a B2C supply of freight transport services moving goods from the UK to France would be supplied in the UK in proportion to the distance travelled in the UK (see the place of supply rules set out in the Place of supply of services ― freight transport and related services guidance note). Although, partly within the scope of UK VAT, it would be zero-rated to the extent suppled in the UK because the goods move from within the UK to a place outside the UK. Therefore, no UK VAT would need to be charged to the customer (although any French VAT obligations would need to be considered).

The transport of goods entirely within the UK would not qualify for this relief.

When can services related to freight transport be zero-rated?

Certain services which are related to freight transport can be zero-rated for VAT purposes. These include:

  1. some services provided in connection with ship and aircraft cargo

  2. some services supplied in connection with the import / export of goods

VATA 1994, Sch 8, Group 8,

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