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HMRC internal manual

VAT Transport

Parts and equipment for ships and aircraft: Position before 1 January 1996 - extra-statutory concession

The relief for spares and equipment for ships and aircraft was first announced in the 1993 Budget, to operate extra-statutorily with effect from 1 April 1993. It was introduced to remove a source of competitive distortion against UK industry by aligning the reliefs in UK law more closely with EC law and with reliefs available in other EC Member States. The extra-statutory concession ran until statutory cover was provided by amendment of the VAT Act 1994 with effect from 1 January 1996, and operated to relieve the same supplies as those now covered by items 2A and 2B.

The text of the concession was:

From 1 April 1993, except in the case of the supply to, importation or acquisition by a Government department, VAT at the zero-rate applies to:

  1. the supply, importation or acquisition of parts and equipment for use in the propulsion, navigation or communications systems or the general structure of any ship including warships of a gross tonnage of not less than 15 tons not being a ship designed or adapted for use for recreation or pleasure.
  2. the supply, importation or acquisition of parts and equipment, identified or specified in accordance with airworthiness standards administered by internationally recognised aviation authorities or in accordance with Ministry of Defence specifications, for use on aircraft of a weight of not less than 8,000kgs not being an aircraft adapted for use for recreation or pleasure.
  3. the supply of services consisting of the making of arrangements for a supply of goods of a description specified in (a) or (b) above.