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HMRC internal manual

VAT Transport

From
HM Revenue & Customs
Updated
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Transport: Agents for passenger transport

The law concerning the making of arrangements for passenger transport is in the VAT Act 1994, Schedule 8, Group 8, item 10(b):

Item No.

  1. The making of arrangements for -

(b) the supply of any service included in Items 1 and 2, 3 to 9 and 11.

Group 8, item 10(b) zero-rates the services of an intermediary making arrangements for certain supplies which are themselves zero-rated under Group 8. This includes the making of arrangements for a supply of passenger transport which is itself zero-rated under Item 4.

The intermediary’s customer may be the supplier of the passenger transport, the purchaser or both.

Item 10(b) does not apply to the making of arrangements for:

  • a supply of goods; or
  • the supply of a designated travel service or a margin scheme supply, even if it relates to passenger transport, since Item 4 of Group 8 does not apply to designated travel services. The making of arrangements for such supplies is therefore standard-rated: see V1-23 Schemes, Chapter 12 Notice 709/5 Tour operators’ margin scheme and VTRANS021000.

The general treatment of agents for VAT purposes is explained in V1-5 Taxable person, chapter 2, Section 2A and in Notice 700 The VAT guide Section 10.

The place of supply rules relating to intermediaries’ supplies are in VATPOSS09000 and Notice 741A Place of supply of services Section 8. 

Example:

A newsagent sells tickets for bus, coach or train services. Provided the transport being arranged is itself zero-rated under Item 4 of Group 8, the making of arrangements for the supply, for which the newsagent receives a commission, is zero-rated under item 10(b).