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HMRC internal manual

VAT Sailaway Boat Scheme

HM Revenue & Customs
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The law

EC law

Council VAT Directive 2006/112/EC (known as the Principal VAT Directive) is a recast of the EC Sixth VAT Directive, and became law on 1 January 2007. The new Directive does not change EC or UK law.

Article 146(1)(b) - formerly Article 15(2) of the Sixth Directive - provides the legal basis for the zero-rating of goods exported by or on behalf of a purchaser not established in the supplier’s country.

UK primary law

Section 30(8) of the VAT Act 1994 permits the zero-rating of goods supplied for export to a destination outside the EC subject to compliance with conditions imposed in regulations or elsewhere.

Section 30(10) of the VAT Act 1994 permits the Commissioners to demand payment of output tax from the person to whom the goods were supplied or any person found in possession of the goods in the UK where:

  • goods supplied for export have not been exported, or
  • relevant conditions for zero-rating the supply have not been met.

UK secondary law

The VAT Regulations 1995 (SI 1995/2518) provide conditions for zero-rating. Regulation 129 outlines the conditions for zero-rating goods intended for export outside the Member States.

This regulation allows the Commissioners to impose further conditions. Those conditions are set out in VAT Notice 703/2 - Sailaway boats supplied for export outside the EC.

Tertiary law

VAT Notice 703/2 - Sailaway boats supplied for export outside the EC lays down the conditions that must be met in full for supplies made under the Sailaway Boat Scheme to be zero-rated. In this respect, parts of the notice have the force of law.