National Car Parks
| Jurisdiction | UK Non-devolved |
| Judgment Date | 15 December 2015 |
| Neutral Citation | [2015] UKFTT 666 (TC) |
| Date | 15 December 2015 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Rachel Short, Gill Hunter
Ms Valentina Sloane instructed by Deloitte LLP appeared for the Appellant
Mr Brendan McGurk, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the Respondents
Value added tax – Car parking – Whether overpayments were consideration for taxable supply of services – Link between consideration given and service received – Held, sufficient link between consideration given and service received – Overpayments were subject to VAT – Taxpayer's appeal dismissed.
The First-tier Tribunal (FTT) dismissed the appeal against HMRC's decision that payments, which exceeded the car parking tariff, constituted consideration for a standard-rated supply of services.
NCP operated car parks in the UK. Overpayments arose, because some customers did not have the correct cash to pay the amount due, as stated on the tariff board. Thus, they inserted into the ticket machines more cash than was due, but the machines gave no change. The customer was notified by the instructions on the ticket machine that it gave no change: “No change given; overpayment accepted”. The ticket issued to a customer stated the amount paid, i.e. including any overpayment (the “additional amount”). On 24 October 2013, NCP claimed repayment of overpayments of car park tariffs in its “pay and display” car parks for the period from September 2009 to December 2012, being within the four-year deadline.
NCP argued that the overpayments made at its car parks were ex gratia payments and “outside the scope” of VAT (para. 5 of the decision).
The FTT held that there was nothing optional or voluntary about the overpayment. If no additional payment was made, there was no contract. The additional payment was a term of the contract, because there is a requirement to pay at least the amount due. The customer had a choice. However, the choice was between having the right to park and not having the right to park. The payment was “voluntary” only to the extent that the customer could choose to park elsewhere or get change, but was an obligatory element of the contract if the customer decided to use the car park (para. 64 of the decision).
The FTT held that, despite the fact that some customers paid more than the tariff, there was a direct link between what they paid and the service provided, because what they paid was the result of a commercial decision by them when putting money in the ticket machine (para. 69 of the decision).
The FTT considered some ECJ cases concerning the lack of a sufficiently direct link between payments made and services supplied, but noted that they involved prices that had been set by statutory bodies. This was also true in Borough of King's Lynn and West Norfolk TAX[2012] TC 02342, where car parking prices were set by a Statutory Order. This was a critical distinction between those cases and the NCP case, where no third party set the price (para. 70 of the decision).
The FTT held that the payment was not made for nothing. A customer, who overpaid, made a bad bargain as a result of a lack of change or a lack of time, but that did not mean that he paid for “nothing” (para. 73 of the decision).
Neither party seriously attempted to argue that the additional amount was for some supply other than car parking (para. 74 of the decision).
The FTT held that the analysis of the contractual process was that there was an offer by NCP through its ticket machine of parking for one hour at a minimum price of £1.40 and a maximum of £2.05. A customer responds to that offer by feeding coins to the machine, which the machine accepts after the minimum price has been reached or exceeded, by stating “press for ticket”. Agreement is confirmed by the customer when the green button is pressed and the agreed price is printed on the ticket. The contract is made, for an agreed price, when the green button is pressed (para. 78 of the decision).
The FTT did not accept NCP's suggestion that the decision must follow King's Lynn in order to comply with the principle of fiscal neutrality. That decision did not bind the FTT and was decided without reference to some arguments that the FTT heard, particularly regarding contract law (para. 95 of the decision).
Thus, NCP's appeal was dismissed.
The FTT examined the Statutory Order, which was referred to in Borough of King's Lynn and West Norfolk TAX[2012] TC 02342, and had doubts whether it stopped that Borough from charging more than the stipulated amount, given that it merely set out the charging bands for the time periods. However, the FTT noted that a significant aspect of the FTT's reasoning was that the Borough could not, as a matter of law, offer customers parking services for any amount other the tariff amount. That was not true for NCP.
[1] This appeal concerns the application of VAT to so called “overpayments” made by customers at the Appellant, National Car Parks Limited (NCP)'s pay and display car parking sites in the UK.
[2] As formulated by NCP the question for the Tribunal is “whether voluntary payments in excess of car parking tariffs constitute consideration for a supply of services and so are subject to VAT”.
[3] NCP operates car parks in the UK. NCP made a claim on 24 October 2013 for overpaid VAT in respect of overpayments of car park tariffs in its pay and display car parks for the period 27 June 2009–28 December 2012. That claim amounted to £488,669.09.
[4] HMRC issued a decision in a letter of 13 November 2013, confirmed in a review letter of 24 January 2014, that the overpayments made in relation to the pay and display car park charges levied by NCP were taxable because the overpayments made “should be regarded as consideration and are therefore taxable”.
[5] NCP appealed to this Tribunal on 21 February 2014 on the grounds that the overpayments made at its pay and display car parks should rightly be treated as ex-gratia payments and outside the scope of VAT.
[6] The overpayments in question arise as a result of customers not having the correct change to pay the exact amount due as stated on the tariff board in the NCP pay and display car parks and so putting more than the amount actually charged into pay and display ticket machines, which do not give change.
[7] This appeal only concerns payments made through pay and display ticket machines which offer a cash only or cash plus credit/debit card payment choice.
[8] The periods under dispute were agreed before the Tribunal to be September 2009–December 2012. The June 2009–September 2009 period was accepted to be out of time and not part of this appeal.
[9] At the hearing the Tribunal requested two pieces of additional information, both of which were provided after the date of the hearing: (i) confirmation from NCP's witness, Mr Heath, that none of NCP's pay and display ticket machines which had given rise to the disputed VAT displayed the expiry time reflecting the value of coins inserted (ii) a copy of the Statutory Order which was referred to in the King's Lynn decision, an earlier tribunal decision which held that overpayments for car parking were not subject to VAT (Borough Council of King's Lynn and West Norfolk TAX[2012] TC 02342).
[10] Article 1(2) – Subject matter and scope
The principle of the common system of VAT entails the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, however many transactions take place in the production and distribution process before the stage at which the tax is charged.
[11] Article 73 – Supply of Goods or Services
In respect of the supply of goods or services, other than as referred to in articles 74 to 77, 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, including subsidies directly linked to the price of the supply.
[12] S 5(2)(a):
“supply” in this Act includes all forms of supply, but not anything done otherwise than for a consideration.
[13] We saw a written witness statement provided by Mr Heath dated 7 May 2015. Mr Heath gave oral evidence to the Tribunal and was cross-examined by Mr McGurk. Mr Heath told us that he had worked for NCP since 2005 and was currently NCP's business development manager.
[14] Mr Heath described the pay and display ticket machines which had given rise to the overpayments in dispute as; pay and display machines which were not configured to provide change to customers and where overpayments were accepted.
[15] Mr Heath described the customer's journey in a pay and display NCP car park:
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1) A customer arrives by car and selects a place to park. There are no barriers at a car park of this type.
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2) The car park will have a number of pay and display ticket machines; usually coin only alongside cash and card machines.
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3) A tariff board next to the pay and display ticket machine sets out the tariff for various parking times.
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4) The customer decides how long to park for and inserts coins to pay for their parking into the pay and display ticket machine or, if available, pays by debit or credit card.
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5) The customer presses a button and the machine dispenses a ticket.
[16] Mr Heath also described the payment process referring to the particular type of pay and display ticket machine used at the NCP car parks in question:
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1) A customer drops coins into the pay and display ticket machine, which accepts a variety of coins but...
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