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HMRC internal manual

VAT Place of Supply of Services

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HM Revenue & Customs
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Hire of means of transport: Hire with crew and liability

Liability

The hire of a means of transport that is a ship or aircraft is also commonly referred to as a ‘charter’. When the place of supply is the UK, the hire of certain ‘qualifying’ ships and aircraft may be zero rated under the VAT Act 1994, Schedule 8, Group 8, items 1 and 2. Guidance on liability can be found in VATPOSTR and in Notice 744C (Ships, aircraft, and associated services).

Hire with Crew

Where the supply is of a ship or aircraft with a crew under a charter contract the supply is first and foremost the supply of the hire of a means of transport; however, we will permit the supply to be treated as transportation if the parties to the charter wish it to be.

Where transport is hired along with a driver, pilot, crew or operator other than under a charter contract this is normally regarded as a supply of passenger transport or freight transport services.

Guidance on transportation is covered by different place of supply rules (see the guidance on passenger transport or freight transport).

Many passenger transport services are zero-rated under the VAT Act 1994 Schedule 8, Group 8, item 4; guidance on liability can be found in VATPOSTR and in Notice 744A (Passenger transport).