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HMRC internal manual

VAT Transport

The supply of ships and aircraft: sub-contractors’ services

The services of a sub-contractor to a shipbuilder or aircraft manufacturer who is constructing a new ship or aircraft are standard-rated, because the sub-contractor is not himself making a supply of a qualifying ship or aircraft.

However, sub-contracted services which are supplied as part of the actual repair, maintenance, modification or conversion of a qualifying ship or aircraft will be zero-rated subject to the normal conditions for the zero-rating of such supplies (see VTRANS120000). Subcontractors are advised by Notice 744C to obtain evidence to substantiate zero-rating of their services.

See also VTRANS111000.