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HMRC internal manual

VAT Transport

Zero-rating of passenger transport: Cruises: Single or multiple supply?

What is the liability of the supplies?

For liability purposes, a cruise may be single or a multiple supply depending on the facts of the case.

Listed below are the main criteria we consider relevant in deciding the liability of cruises.

Single zero-rated supply of passenger transport if:

  • the essential nature of the supply is passenger transport and the normal conditions for the relief are met (see paragraphs VTRANS020600, VTRANS020700, VTRANS020800, VTRANS020900, VTRANS021000 and VTRANS021100); and
  • all elements of the cruise are integral and it would be neither practicable nor realistic to separate them; and
  • the cruise is held out for sale at a single price with no specific charges or discounts for particular services taken or not taken up.

Multiple supplies - mixed liabilities if:

  • it is practicable, reasonable and realistic to separate the elements of the cruise; and
  • separate and identifiable charges are raised or negotiable.

Separate supplies will normally arise when different elements of the cruise are the subject of separate negotiation and customer choice, separately identifiable obligations on the supplier, and separate charges. Separate supplies are not integral to the main supply and could be omitted.

Where separate supplies of any of the individual elements are made, they should be taxed according to their respective liabilities. For example, a separate supply of catering is standard-rated when supplied in the UK.

Single standard-rated supplies

  • A cruise containing only a minor transport element which is incidental to a standard-rated supply; for example, a wedding reception involving limited travel constitutes a single standard-rated supply.