VAT registered businesses that sell parts and accessories for boats where the boats are designed or adapted for the personal use of a disabled person, or to charities that make them available for disabled persons.
From 1 January 2012, the current concessionary arrangement which allows VAT zero-rating on the supply of parts and accessories designed solely for use in, or with, boats that are designed or permanently and substantially adapted for use by disabled persons will no longer apply.
However, VAT zero-rating continues to apply on supplies of:
The UK VAT law allows parts and accessories designed solely for use in or with goods eligible for zero-rating in Items 2(a) to 2(g) of Group 12, Schedule 8 except for parts and accessories for use or with boats described in Item 2(i).
The concession has allowed parts and accessories that are not covered by the scope of the relief to be treated as zero-rated. HM Revenue & Customs does not have the discretion to allow this concessionary treatment, and it is not possible to put the concession on a statutory basis as this would contravene EU law. There is no legal basis in EU law which would permit this concession to be introduced in UK legislation.
The Government announced in December 2010 that the concession would be withdrawn on 1 January 2012, to allow businesses a year to prepare for the change.
VAT zero-rating applies to parts and accessories designed solely for use in or with goods eligible for zero-rating in Items 2(a) to 2(g) of Group 12, Schedule 8, VAT Act 1994. Item 2(h) by default excludes parts and accessories for boats described in Item 2(i) to be zero rated.
If you have any questions about this change, please contact VAT Disabled Reliefs Helpline on Tel 0845 302 0203.
Issued 19 December 2011
