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VAT: National Car Parks Ltd – Upper Tribunal decision

VAT: National Car Parks Ltd – Upper Tribunal decision

The UT has dismissed the taxpayer’s appeal finding that the taxable amount is the full value paid by the taxpayer, including any overpayment.


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The taxpayer operates pay and display car parks. A person parking their car is required to purchase and display a ticket. The customer is notified by the instructions on the front of the pay and display ticket machine that the machine does not give change - “No change given overpayment accepted”. If the customer does not have the correct change and inserts coins to a value above the tariff displayed, the machine will not recognise any additional parking time. The hypothetical example used is a tariff of £1.40 for up to one hour and a customer has limited change and pays £1.50. The taxpayer submitted a claim based on the fact that it should only account for VAT on the £1.40. The Upper Tribunal (UT) concluded that VAT is due on car park overpayments with the taxable amount for VAT purposes being the total amount received.

The earlier First-tier Tribunal (FTT) dismissed the taxpayer’s appeal concluding that there was a link between the full payment and the service provided. The FTT added that the customer knew what they were paying for the service and had just made a bad bargain. The earlier FTT noted the similar Kings Lynn FTT where overpayments in local council car parks were found to be outside the scope of VAT. However, the FTT effectively distinguished this on the basis Kings Lynn’s charges were fixed by statutory order, which prevented the local authority from charging more than that amount for parking meaning any overpayment was a donation.

The UT focused on Article 73 of the VAT Directive, which provides that the “the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party”. The UT noted that consideration for VAT purposes is not the same as that under contract law and any value shown on the machine or printed on a ticket is of limited relevance. The UT added it is clear from cases such as the Dutch Potato case (C-154/80) and Campsa (C-285/10) that the meaning of consideration is that given by the customer. The UT added that the contract is formed when the customer inserts the money into the machine and if a customer pays £1.50 that is the amount received by the supplier and that is the taxable amount for VAT purposes.

The UT ends (para 44) by stating that King’s Lynn FTT was wrongly decided and the Tribunal was unduly influenced by the fact that the car parking charges were set by statutory order and that neither the council nor the customer was able, unilaterally, to alter the charge without the order being amended. The UT added it did not accept that the way in which the tariff of charges is set can determine the nature of the overpayment.

To access the decision click here.

For further information please contact:

Karen Killington

Steve Powell

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