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HM Revenue and Customs Brief 42/11

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HM Revenue and Customs -Tax Authorities

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Issued 19 December 2011

VAT: parts and accessories for boats supplied to disabled people and charities - important change from 1 January 2012

Who needs to read this?

VAT registered businesses that sell parts and accessories for boats where the boats are designed or adapted for the personal use of a disabled person, or to charities that make them available for disabled persons.

What is the change?

From 1 January 2012, the current concessionary arrangement which allows VAT zero-rating on the supply of parts and accessories designed solely for use in, or with, boats that are designed or permanently and substantially adapted for use by disabled persons will no longer apply.

However, VAT zero-rating continues to apply on supplies of:

  • (a) boats that are designed or substantially and permanently adapted for the domestic or personal use of disabled persons
  • (b) parts and accessories that are used in connection with repairs or maintenance to qualifying boats
  • (c) parts and accessories that are included as part of the single supply of qualifying boats

The reason for this change

The UK VAT law allows parts and accessories designed solely for use in or with goods eligible for zero-rating in Items 2(a) to 2(g) of Group 12, Schedule 8 except for parts and accessories for use or with boats described in Item 2(i).

The concession has allowed parts and accessories that are not covered by the scope of the relief to be treated as zero-rated. HM Revenue & Customs does not have the discretion to allow this concessionary treatment, and it is not possible to put the concession on a statutory basis as this would contravene EU law. There is no legal basis in EU law which would permit this concession to be introduced in UK legislation.

The Government announced in December 2010 that the concession would be withdrawn on 1 January 2012, to allow businesses a year to prepare for the change.

The legal basis for the relief

VAT zero-rating applies to parts and accessories designed solely for use in or with goods eligible for zero-rating in Items 2(a) to 2(g) of Group 12, Schedule 8, VAT Act 1994. Item 2(h) by default excludes parts and accessories for boats described in Item 2(i) to be zero rated.

Further advice

If you have any questions about this change, please contact VAT Disabled Reliefs Helpline on Tel 0845 302 0203.


About the Author

Crown Copyright 2011.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs.



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Article Published/Sorted/Amended on Scopulus 2011-12-27 14:36:13 in Tax Articles

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