The Value Added Tax (Ships and Aircraft) Order 1995

Explanatory Note

(This note is not part of the Order)

This Order, with effect from 1st January 1996, varies Group 8 of Schedule 8 to the Value Added Tax Act 1994. The changes are partly as a consequence of the amendment of Article 5 of Council Directive 77/388/EEC (OJ No. L145, 13.6.1977, p.1) (“the Sixth VAT Directive”) by Article 1(1) of Council Directive 95/7/EC (OJ No. L102, 5.5.1995, p.18) (“the Second VAT Simplification Directive”), and partly to give statutory effect to the zero-rating of certain supplies of parts and equipment for ships and aircraft which are themselves zero-rated (“qualifying”ships and aircraft).

Articles 2(a) and 2(b) of the Order substitute new items 1 and 2 which maintain zero-rating for the modification and conversion of qualifying ships and aircraft.

Article 2(c) introduces new items 2A and 2B which extend zero-rating to supplies of certain parts and equipment for qualifying ships and aircraft.

Article 2(d) amends item 10 of Group 8 to extend zero-rating to the making of arrangements for the supply of the parts and equipment zero-rated under new items 2A and 2B.

Article 2(e) introduces a new Note (A1) which defines “qualifying ships”and “qualifying aircraft”for the purposes of Group 8.

Article 2(f) amends note (1) as a consequence of the amendment of items 1 and 2 of Group 8.

Article 2(g) amends Note (2) to provide zero-rating for the letting on hire of the goods zero-rated under the new items 2A and 2B.

Article 2(h) introduces a new Note (2A) to exclude certain supplies of parts and equipment to Government departments from zero-rating under the new items 2A and 2B.

Article 2(i) amends Note (7) as a consequence of the amendment of items 1 and 2 of Group 8.