Customs' news - VAT: New rules on excess parking charges

Customs' Business Brief 19/02 explains Customs policy on VAT on excess charges levied in car parks, following the Tribunal's decision in the case of Bristol City Council (No 17665). The Council had reclaimed VAT that it had paid on excess charges levied (under sections 35 and 46, Road Traffic Regulation Act 1984 and designation orders made pursuant thereto) on motorists who had not purchased a valid parking ticket. It argued that these were not a supply and this approach was upheld in the Tribunal: 'The excess charges, whatever may be their precise nature, as damages for trespass or as a penalty for infringement, are not consideration for a supply of parking'.

Customs has now announced that it will not appeal against the decision and advises as follows.

'Other Local Authorities

Local Authorities who operated off-street car parks within the same statutory framework and consider the decision applies to them are invited to submit claims for repayment. However, repayment of any VAT claimed will be subject to the three-year cap on repayments.

Customs had already accepted that penalty charges imposed by Local Authorities operating off-street car parks under the Road Traffic Act 1991 were outside the scope of VAT. This Tribunal decision means that no VAT is due on penalty/excess charges imposed by Local Authorities, whichever statutory regime applies.

Non Local Authority Car Parks

Excess charges levied in non Local Authority car parks generally arise under the terms of the contract between the operator and the driver. Accordingly, these charges (like those considered in the earlier Tribunal case J G Leigh t/a Moor Lane Video (No 5098)) are subject to VAT.'

(Source: Customs' Business Brief 19/02, issued 19 July 2002)

Issue: 3868 / Categories: