Off Street Car Parking Update- Can we consider it ‘parked’?
The seemingly basic question of whether or not local authorities should be entitled to treat their off street car parking charges as outside the scope of VAT was first posed to H M Customs and Excise (as it was) almost 14 years ago and, following formal legal action fronted by four local authorities (Isle of Wight, West Berkshire, Mid-Suffolk and South Tyneside), even the courts have been involved in trying to answer this ‘basic question’ for over eight years.
Perhaps, to be fair, for most of the time, the courts have been occupied by clarifying what is really meant by distortion of competition and how one should test for it. So, it is only relatively recently that the courts have been able to consider how this applies to the activity of off street car parking.
So, are we any closer to an answer?
Well, on 15th October 2014, the Upper Tribunal released what may prove to be the final decision in this long-running saga.
In dismissing the four local authorities’ appeal, the Upper Tier has concluded that there would be a significant distortion of competition if local authorities were not required to account for output VAT on their off street car parking charges. This supports the previous decision made at the First Tier Tribunal in October 2012. However, although this suggests that standard rate VAT is indeed due on off street car parking charges, there remains a possibility of further appeal, so we cannot say yet that this will indeed be the final step.
Therefore, for the time being at least, we would recommend that local authorities continue to follow their adopted procedures with respect to their income from the provision of off street car parking.
You can access the full Upper Tier decision here.