Revenue and Customs Brief 3 (2019) - VAT Zero-rating of transport of disabled passengers
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Published 14 June 2019
To clarify that HMRC’s policy on the scope of the VAT zero
transport services has not changed following the Upper Tribunal
decision in Jigsaw
Medical Services Limited (2018) UKUT 0222.
Suppliers that provide transport services in emergency vehicles
(ambulances) or in passenger vehicles (such as, out-patient mini-buses)
including those adapted for the carriage of one or more wheelchairs.
The Jigsaw case considered whether transport in certain types of
‘blue light’ emergency ambulances was zero rated for VAT.
Tribunal decided that it was not zero rated.
The decision at paragraph 2(2) states it was ‘common
‘patient transport ambulance services are both exempt and
This has prompted some transport providers to seek clarification of
HMRC’s policy. This comment needs to be read in the context of
of the decision and the legal tests. It was not referring to all
patient transport ambulance services.
The supply of transport services for sick or injured persons in
vehicles specially designed for that purpose is an exempt supply for
The supply of passenger transport is zero rated if the vehicle used
meets certain seating criteria. The supply of transport in any vehicle
with seating to carry 10 or more passengers (including the driver) is a
Where a vehicle is designed or adapted to safely carry one or more
persons in a wheelchair and, if it were not for those changes alone,
the vehicle would seat 10 or more passengers, it is a zero-rated supply.
It is possible for a vehicle designed to carry sick or injured
persons to also meet the seating criteria. The transport of sick or
injured people in such a vehicle would therefore meet the criteria for
both VAT exemption and zero rating. In these cases the zero rate would
take precedence. Not all vehicles designed to carry sick or injured
people will meet the seating criteria, so transport of passengers in
these vehicles is not zero rated.
decide if a vehicle can carry 10 or more people
This must be considered by reference to the actual and anticipated
ways in which the vehicle is or will be used. Simply demonstrating that
10 seats can fit in a vehicle is insufficient to apply the zero-rating.
To meet the seating criteria, the seats must also be usable in a
sensible way and in acceptable circumstances. The vehicle must meet the
seating criteria at the time the supply of transport takes place.
Sensible and acceptable circumstances include:
- complying with legal requirements concerning design, construction
and operation of vehicles to ensure the safe transport of the
passengers in the vehicle
- passengers must be able to safely access and use all the seats
without being impeded by fittings and fixtures
The zero-rate includes the transport of passengers in a vehicle
designed or substantially and permanently adapted for the safe carriage
of a person in a wheelchair or, 2 or more such persons and which, if it
were not so designed or adapted would be capable of carrying no less
than 10 persons.
The adaptions for wheelchairs rule allows transport, in vehicles
that otherwise would have 10 seats, to be zero rated. Transport in a
vehicle with less than 10 seats is not intended to be zero rated on the
basis that the vehicle could be redesigned to have at least 10 seats.
The Jigsaw decision sets out the following approach:
- Identify what was done to the vehicle to design it or adapt it
for the safe carriage of a person in a wheelchair.
- If the wheelchair modifications were not made, what extra
passenger capacity could be added?
What is not allowed, is to presume what other changes could be made
to increase the number of seats. That is inconsistent with the rule
that looks at the vehicle as it is and how the vehicle is being used.
The following will assist in applying the tests for zero rating.
Does the vehicle have 10 or more seats that are safe to use at the
same time? If so, transport in that vehicle is zero rated.
If not, does the vehicle have wheelchair modifications? If
transport will be standard rated unless the exemption for the transport
of sick or injured persons applies.
If ‘Yes’ then, without the wheelchair modifications, how
notional seats would occupy the resultant space? Then, does the number
of actual seats plus these notional seats equal 10 or more that can be
safely used at the same time? If so, transport in that vehicle is zero
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Article Published/Sorted/Amended on Scopulus 2019-06-15 00:00:03 in Tax Articles