The Zero-Rating Of Aircraft

Introduction

Readers of Legalflyer will be aware from previous editions that the European Commission successfully challenged the UK's VAT zero rate for supplies of aircraft and parts on the basis that the UK's existing rules for aircraft (contained in VATA 1994, Sch 8, Group 8) did not correctly implement the provisions of Article 148 of Council Directive EC 2006/112. The UK rules provided that any supply of an aircraft with a take-off weight exceeding 8000kg and neither designed nor adapted for use for recreation or pleasure should be zero-rated. However, the exemption provided for in Article 148 is tested by reference to the airline rather than the aircraft, applying to supplies of aircraft and parts that are "used by airlines operating for reward chiefly on international routes".