VQOTW: Aircraft Parts

My client’s VAT registered business has quite recently started supplying parts for aircraft. His supplier has said they will zero-rate their supply to him if he can provide them with a certificate. He couldn’t explain why the parts would be zero-rated to my client, and we aren’t familiar with this area. What is the certificate for and where does the client get it from?

HMRC has a policy that allows parts bought in a supply chain that is destined for a qualifying aircraft to be zero-rated.

A ‘qualifying aircraft’ is legally defined as any aircraft that is used by either:

  • an airline operating for reward chiefly on international routes
  • a state institution and is of a weight of not less than 8,000kg and is neither designed nor adapted for use for recreation or pleasure

In order to qualify for zero-rating, two conditions must be met. The parts and equipment must be:

  • the sort ordinarily installed or incorporated in the propulsion, navigation or communications systems, or the general structure of a qualifying aircraft
  • for the incorporation or installation in a qualifying aircraft

‘Parts and equipment’ also extends to part-assembled aircraft, for example, the fuselage or wings.

Where there is a supply chain, a supplier in the chain can zero rate if at the time of the supply it is known that the parts are destined for installation in a qualifying aircraft. In order for a supplier to zero-rate the supply, they need to hold evidence that the parts are eligible for relief.

VAT Notice 744C section 13 describes the type of evidence that a supplier may require in order to be satisfied with the status of the aircraft and the intended use of the parts. The section includes suggested formats of declarations that the customer can complete for both of these for an issue to the supplier.

https://www.gov.uk/guidance/ships-aircraft-and-associated-services-notice-744c#evidence-of-qualifying-ship-or-aircraft


Please share this article with your clients


Our team of experts have a wealth of experience and can also provide a written consultancy service at competitive rates.

Back to Community

VAT Advisor
0844 892 2470


Arti has worked in VAT since 2004 spending 11 years with HMRC. During her time in the department she was a visiting officer, a business records check officer providing educational visits and spent the last three years on the Alcohol Fraud team where she gained a good understanding of civil penalties and appeals. In addition she was an IT specialist providing support to colleagues and an associate trainer delivering VAT and Penalties training.

My VIP Tax Team VAT question of the week: VAT Exemption for Financial Intermediary Services
My VIP Tax Team VAT question of the week: Upcoming changes to VAT penalties & VAT interest charges
My VIP Tax Team VAT question of the week: Costs in relation to Share Transactions