Shipping: Energy Supply
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the adequacy of the VAT treatment of (a) shore power supplied to ships and (b) the services provided by contractors who connect or disconnect that supply; and if she will make it her policy to amend the Extra-Statutory Concessions for electricity to be a zero-rated marine fuel for VAT purposes.
Answered by James Murray
VAT charged on electricity generated through shore power and supplied to ships can be recovered by businesses operating these ships subject to the normal rules of the tax.
Extra-Statutory Concessions (ESCs) are remissions of revenue that allow relief in specific sets of circumstances and are authorised when strict application of the law would create a disadvantage or the effect would not be the one intended. This does not apply to the rules that relate to the supply of electricity.
ESC 9.2 allows zero-rating of marine fuel as ships stores. It is limited to a specific set of rebated duty fuels (fuel oil, gas oil and kerosene) that qualified for zero-rating before July 1990. The Government has no plans to review or amend the scope of ESC 9.2.
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