SolvedVTRANS050000 | Transport: Freight transport and related services - introduction
From HM Revenue & Customs · VAT Transport
International freight transport was zero-rated at the start of VAT in 1973. The zero rate also applied to related services such as the handling of cargo, the handling of exports and imports, and intermediary services in arranging any of these.
On 1 January 1993, with the introduction of the EU Single Market, there were significant changes to the VAT treatment of freight transport.
On 1 January 2010 significant changes were made to the place of supply of services; these include freight transport and associated services
What is freight?
Freight includes
goods/cargo;
mail;
documents;
unaccompanied vehicles;
vehicles transported on ships which are charged at a “driver accompanied” rate; and have no passengers, including buses and coaches;
animals; and
corpses.
The transport in a ship plane or train of a bus, coach or taxi with passengers is regarded as passenger transport, and is dealt with under the separate rules for passenger transport described in VTRANS020000, VTRANS030000 and VTRANS040000.
After 1 January 2010
From 1 January 2010 the place of supply of most services, including freight transport and related services, when made to a business customer is the place of belonging of the customer. The place of supply of these services made to a customer not in business is the UK where that transport takes place within the UK. For all other journeys the place of supply is where the transport takes place in proportion to the distance covered.
The full details of place of supply of services can be found in VATPOSS.
There has been no change to the liabilities of freight transport and related supplies where the place of supply is UK. However, because of the change to the place of supply some supplies previously performed outside the UK may now have a place of supply within the UK and be taxable here and vice versa.