HMRC have issued Revenue & Customs Brief 3 (2019) VAT zero rating of transport for disabled passengers. This is to clarify its position and considers the situation where passenger vehicles are adapted for wheelchair transport.

The question as to whether to zero rating 'trumps' the exemption for transport services of the sick was decided by the Upper Tribunal in Jigsaw Medical Services Limited [2018] UKUT 222 HMRC says it has not changed its policy, however it has issued a brief to explain how to tell if zero rating applies.

  • It is possible for a vehicle designed to carry sick or injured persons to also meet the seating criteria for zero-rating.
  • 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.

HMRC says that the Jigsaw decision sets out the following approach:

  1. Identify what was done to the vehicle to design it or adapt it for the safe carriage of a person in a wheelchair.
  2. 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.

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Revenue & Customs Brief 3 (2019) VAT zero rating of transport for disabled passengers