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HMRC internal manual

VAT Transport

Zero-rating of passenger transport: Cruises: Business Brief 5/99 on passenger transport services including catering


This Business Brief explains Customs’ position following the decision in the Pennine Boat Trips case. The Tribunal considered the VAT position of passenger transport supplied with catering on river boats. The supplies were made to groups, and each passenger paid a single charge which varied according to the choice made from a menu of inclusive catering options. Catering was supplied in-house, rather than bought in from another supplier.

The Tribunal decided that there was a single supply of zero-rated passenger transport to which the catering was incidental, irrespective of its quantity and quality. Customs consider that this case is confined to the facts. Consequently, we will not accept claims seeking refunds of VAT on the basis of this decision from operators of boat trips or providers of other transport services with catering. However, the issue of the VAT treatment of passenger transport services which include catering is being considered further by the Tribunal in the case of Sea Containers heard on 15-16 December 1998. Once the outcome of that case is known, Customs intend to review the policy in this area. The results will be published in a Business Brief.

In the meantime, the VAT treatment of these services are as described in section 9 of Public Notice 744A VAT: Passenger transport. Similarly, agreements with trade associations representing operators of boat trips on canals and rivers remain in place. For further information businesses and their advisors should contact their local VAT Business Advice centre listed under HM Customs and Excise in the telephone book.