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HMRC internal manual

VAT Transport

The handling and storage of ship and aircraft cargo: Handling, storage and other services

Handling services

Examples of handling services which are zero-rated under Group 8, item 6(b) when supplied in a port or Customs and Excise airport or land adjacent to a port, or transit shed:

  • cargo security services;
  • container handling for which a box charge is made;
  • loading stores and discharging empties;
  • loading, unloading, reloading, stowing, securing and shifting cargo;
  • preparing or amending bills of lading, air waybills and certificates of shipment;
  • preparing or amending customs entries;
  • presenting goods for customs examination;
  • sorting, opening for inspection, repairing and making good, weighing and taring, taping and sealing, erasing and re-marking, labelling and re-numbering, tallying, checking, sampling, measuring or gauging of goods;
  • stevedoring and porterage;
  • survey of cargo (including damaged cargo);
  • the movement of goods to or from a ship by lighter.
  • specialised storage and handling services for live animals (see VTRANS080400).

Goods handling services that are not zero-rated under Group 8, item 6(b), may qualify for zero-rating under item 11(a) if the goods concerned have been imported from, or are to be exported to, a place outside the EC - see VTRANS080000.

Services of storage and handling of goods which do not qualify for zero-rating under item 6(b) because they are not directly connected with a movement of ship or aircraft cargo, may from 1 June 96, qualify for relief under the VAT Act 1994, section 18(C) where they are carried out on goods in a warehousing suspension regime: see guidance IMPS Imports.

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Storage

The storage of goods in a port or customs and excise airport or on land adjacent to a port or transit shed, is zero-rated when supplied in connection with a specific movement of goods that have been or are to be carried in any ship or aircraft, for instance their storage overnight before being loaded or after being unloaded. The term includes cold storage.

The grant of a licence to occupy land to store goods in a specific area, as distinct from the service of storing them, may be exempt from VAT - see VATLP - Land and Property.

Relief under item 6(b) does not extend to long-term storage of goods, because it is not considered to meet the direct needs of ships, aircraft or their cargo. Zero-rating under item 6(b) is appropriate however, where storage for a longer period than is strictly required in connection with the movement of the goods is necessary because of unavoidable events such as industrial action, transport breakdown.

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Demurrage

Demurrage is the charge made by a transport operator for the detention in a port of ships, railway wagons, vehicles, containers and pallets used in the provision of a transport service when the customer delays unloading the freight beyond a specified time. The charge is normally made at a rate for each day in excess of the stipulated period, and is accepted as being further consideration for the service of the facility to use the goods for the handling of freight. It is therefore zero-rated providing the general conditions of item 6(b) are met.

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Hire of goods

The letting on hire of any goods, including cranes or other lifting equipment without an operator is not zero-rated under this item, by virtue of Legal Note (5) to Group 8