Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Transport

From
HM Revenue & Customs
Updated
, see all updates

Passenger transport connected with recreational activities or airport car parking: Preserved railways

Because many preserved railways function as public transport systems it was not possible to include specific rules on historic preserved railways in the legal drafting of Note 4A to Group 8. They therefore present several potential borderline problems, since they may provide zero-rated passenger transport services similar to those of normal scheduled train services, or standard-rated transport within a place of entertainment etc such as a theme park, or their own premises may themselves be a place of entertainment etc, rendering fares associated with admission to the premises standard-rated.

Zero-rated passenger transport.

Where a preserved railway provides a timetabled service between stations at which passengers can board and alight, and the railway is not within a place or entertainment or interest as defined in VTRANS030400, the service is one of passenger transport and is zero-rated. This remains the case where minor additional facilities are supplied in the course of the journey: such facilities are not considered to create a place of entertainment or interest in their own right.

Examples are:

  • Santa Specials (mince pie, drink, present from Santa);
  • Winter Warmers (soup);
  • Hogmanay Specials (whisky or other alcoholic drink); and
  • Historic Train days where the rolling stock used for transporting passengers is from a particular period. Displays of shunting etc may be given.

In addition to their usual services, many preserved railways hold special events at stations which may differ widely from year to year. The scale of many of these is minimal and does not prevent any associated transport benefiting from zero-rating. Examples of events which do not create a place of entertainment or interest and allow fares to remain zero-rated are:

  • Thomas the Tank Engine days, where the rolling stock is decorated with character faces and which may include appearances by the Fat Controller, Mrs Kyndley, a Punch and Judy show and clowns;
  • Postman Pat days, where Postman Pat loads mail onto a train; and
  • Behind the Scenes weekends which give customers access to workshops, signal boxes etc.

This list is not exhaustive.

Standard-rated passenger transport

Transport within a place of entertainment or interest

Passenger transport provided using preserved trains within any of the places of entertainment or interest listed in VTRANS030400 is standard-rated when supplied by the person granting admission to, or the right to use the facilities of, the place of entertainment, or by a person connected with him.

If the railway is operated within a place of entertainment independent of the person granting admission to, or the right to use the facilities of, the place of entertainment the supply maybe zero-rated as transportation.

Where such a railway runs in a park for which there is no admission charge, but where the railway is one of many facilities (such as crazy golf, putting, croquet, radio boats etc) for which a single charges is made for use of all the facilities by the person operating the railway that will be a single standard-rate supply.

“Experiences”

Some preserved railways provide “experience” events, such as learning to drive a steam train. This type of event will be standard-rate as it is not a supply of transport.

A railway as a place of entertainment or interest in its own right

The provision of facilities or events of a significant scale at a station may potentially turn it into a place of entertainment or interest in its own right and thereby render fares and other charges to and from that place standard-rated. Most facilities at stations or other premises, however, are likely to be small scale.

Examples are a children’s playground, or a “museum” or “exhibition” which is little more than an enhanced storage shed where rolling stock which is not in use can be viewed by the public.

Such facilities are regarded as incidental to zero-rated transport if included in the ticket price. However, a full scale permanent theme park, museum or exhibition, or a major event such as a county fair, agricultural show, or antique or craft fair held on railway premises could be of sufficient scale to amount to a place of entertainment or interest in its own right. For example, in a decided case, a railway storage shed at a station was registered with the Museum Commission as a museum and the fare included admission to it. It contained seven tracks some 80 metres long. Four were used simply for storage but the remaining three had nose to tail high quality exhibits of historic railway engines and carriages. It was ruled that the fares were standard rated.

Each case will need to be judged on its own facts.