HMRC has confirmed that its policy on the scope of the VAT zero rate for transport services has not changed following the Upper Tribunal decision in Jigsaw Medical Services Ltd [2018] UKUT 222 (TCC).
The position remains, broadly, where a vehicle is designed or adapted to carry one or more persons safely in a wheelchair and, were it not for those changes alone, the vehicle would seat ten or more passengers, the supply of passenger transport in that vehicle may be zero-rated.
In Revenue and Customs Brief 3/2019: VAT zero-rating for transport of disabled passengers, HMRC says that simply demonstrating ten seats can fit in a vehicle is not in itself sufficient for zero-rating to apply. The seats must be usable ‘in a sensible way and in acceptable circumstances’ to meet the seating criteria. Sensible and acceptable circumstances include:
complying with legal requirements concerning design, construction and operation of vehicles to ensure the safe transport of the passengers in the vehicle; and
ensuring passengers are able safely to access and use all the seats without being impeded by fittings and fixtures.
HMRC has confirmed that its policy on the scope of the VAT zero rate for transport services has not changed following the Upper Tribunal decision in Jigsaw Medical Services Ltd [2018] UKUT 222 (TCC).
The position remains, broadly, where a vehicle is designed or adapted to carry one or more persons safely in a wheelchair and, were it not for those changes alone, the vehicle would seat ten or more passengers, the supply of passenger transport in that vehicle may be zero-rated.
In Revenue and Customs Brief 3/2019: VAT zero-rating for transport of disabled passengers, HMRC says that simply demonstrating ten seats can fit in a vehicle is not in itself sufficient for zero-rating to apply. The seats must be usable ‘in a sensible way and in acceptable circumstances’ to meet the seating criteria. Sensible and acceptable circumstances include:
complying with legal requirements concerning design, construction and operation of vehicles to ensure the safe transport of the passengers in the vehicle; and
ensuring passengers are able safely to access and use all the seats without being impeded by fittings and fixtures.
