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Vehicle Control Services Ltd v CRC, Court of Appeal
The taxpayer provided parking control services to owners of car parks and land. An issue arose as to whether the taxpayer was liable to pay VAT on parking penalties.
The First-tier tribunal and the Upper Tribunal held that the charges were consideration for a supply of services and subject to VAT.
The Court of Appeal ruled the right to park could be conferred only by means of a contract between the taxpayer and the motorist.
The contract between the taxpayer and the landowner gave the former party the right to remove trespassers, as did the contract between the taxpayer and the motorist. To enforce the right, the taxpayer had to be able to impose a fine when a motorist parked unlawfully.
On that basis, the penalty imposed constituted damages for breach of contract, not consideration for the supply of services.
The taxpayer’s appeal was allowed.
