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HMRC internal manual

VAT Transport

HM Revenue & Customs
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Zero-rating of passenger transport: Introduction

VTRANS020000 deals with the liability of passenger transport under the VAT Act 1994, Schedule 8, Group 8, item 4; which confers extensive zero-rating on passenger transport services. Legal Notes 4A-4D to Group 8 provides some fine tuning to the basic item.

Before looking at the liability of a supply of passenger transport, you must be satisfied that the supply takes place in the UK. The rules governing the place of supply of passenger transport services are given in VATPOSTR2000, and in Notice 741A, Section 7. If a service is supplied outside the UK under these rules, it is not zero-rated under Group 8, but is outside the scope of UK VAT. A UK supplier of such services is not required to charge UK VAT, but may be required to register for VAT or its equivalent in the country where he makes his supply.

For supplies within the UK, the legal provisions broadly apply the zero-rate to the transport of passengers

  • in vehicles designed or adapted to carry ten or more passengers, or
  • by the Post Office, or
  • on any scheduled flight, or
  • from a place within to a place outside the UK, or vice versa.

Notes 4A - 4D exclude from the zero-rating, and therefore tax at the standard-rate

  • pleasure flights
  • transport in connection with airport car-parking when it is supplied by the person who supplies the car-parking, or by a person connected with him
  • transport provided to, within, or from places of entertainment or cultural interest, when it is supplied by the person who supplies the right of admission to, or right to use the facilities of, such a place, or by someone connected with him.

Notes 4A - 4D are dealt with in VTRANS030000.