Vehicle Control Services Ltd v The Commissioners for HM Revenue & Customs
| Jurisdiction | UK Non-devolved |
| Judgment Date | 02 May 2012 |
| Neutral Citation | [2012] UKUT 129 (TCC) |
| Date | 02 May 2012 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2012] UKUT 129 (TCC).
Upper Tribunal (Tax and Chancery Chamber).
Judge Roger Berner, Judge Nicholas Aleksander.
Timothy Brown (instructed by Barber Harrison & Platt, chartered accountants) for the appellant.
Sarabjit Singh (instructed by the Solicitor to HM Revenue and Customs) for the respondents.
The following cases were referred to in the judgment:
Alamo Housing Co-operative Ltd v MeredithUNK [2003] EWCA Civ 495
Belgium v Temco Europe SAECASVAT (Case C-284/03) [2007] BVC 308; [2004] ECR I-11237
Bristol City CouncilVAT No. 17,665; [2002] BVC 4,077
Countryside Residential (North Thames) Ltd v TugwellUNK [2000] 2 EGLR 59
Edwards v BairstowELRTAX [1956] AC 14; (1956) 36 TC 207
Manchester Airport plc v DuttonELRUNK [2000] QB 133; [1999] 2 All ER 675
Seagar Enterprises Ltd (t/a Ace Security Services)VAT No. 15,432; [1998] BVC 4,085
Sinclair Collis Ltd v C & E CommrsECASVAT (Case C-275/01) [2003] BVC 374; [2003] ECR I-5965
Thornton v Shoe Lane Parking LtdELR [1971] 2 QB 163
Value added tax - Supply - Parking control services - Private car parks - Taxpayer operating car parks on private land on behalf of owners or occupiers - Parking enforcement charges retained by operator - Whether charges consideration for supply - Whether charges outside scope of VAT as damages for trespass or breach of contract - Whether contract existed between operator and motorist - Whether retention of charges consideration or additional consideration for provision of services to landowner.
This was an appeal by the taxpayer against a decision of the First-tier Tribunal ([2011] UKFTT 125 (TC); [2011] TC 00999) that certain parking enforcement charges which were retained by it, as the operator of car parks on private land, were consideration for a standard-rated supply of services by the operator to the owners and occupiers of the land, and accordingly liable to VAT.
The taxpayer company managed and operated private car parks under agreements with the owners or occupiers of the land. It received and retained parking enforcement charges. The appeal related to certain of those charges. The taxpayer argued that the income was received by it as principal and not as agent for the landowners and was outside the scope of VAT as paid by motorists in lieu of damages for trespass or damages for breach of contract. HMRC took the view that that income was received by the taxpayer as remuneration for a supply of services to the landowner.
The First-tier Tribunal found that the taxpayer did not have an interest in the land which would entitle it to sue for trespass. The retained charges were remuneration for providing a service as agent of the landowner and were subject to VAT. Further, the taxpayer had not shown that the income was damages for breach of contract. It was therefore chargeable to VAT at the standard rate ([2011] UKFTT 125 (TC); [2011] TC 00999). The taxpayer appealed.
Held, dismissing the appeal:
1.For an action in trespass, there had to be not only effective control but also actual occupation or the right to actual occupation. In this case, the taxpayer did not have a contractual right to occupy or have possession with effective control. Even if it had been the case that the taxpayer had rights of occupation or possession sufficient to found an action in trespass, it was clear that there were limits to the application of such a remedy. The remedy had to protect, but not exceed, the legal rights granted by the licence. In the present case, the limited rights afforded to the taxpayer under the contract did not require protection from motorists who parked their cars in breach of the relevant restrictions. Such behaviour was of the very essence of the arrangements between the taxpayer and the owner or occupier of the land. Accordingly, the taxpayer had no right to claim in trespass. (Manchester Airport plc v Dutton [2000] QB 133, Countryside Residential (North Thames) Ltd v Tugwell [2000] 2 EGLR 59 and Alamo Housing Co-operative Ltd v Meredith [2003] EWCA Civ 495 applied.)
2.In all the circumstances, contrary to the finding of the First-tier Tribunal, there was no contract between the taxpayer and the motorist. The only relevant contract to which the taxpayer was a party was that between the taxpayer and the owner or occupier of the land. Under that contract the taxpayer provided parking control services, which amounted to the management and operation of the parking sites on behalf of the landowner. The taxpayer was permitted under the contract to collect and retain all fees and charges from parking enforcement action.
3.The legal position was that the taxpayer collected the various parking charges as agent for the landowner, which represented damages for trespass, or for breach of a contract between the landowner and the motorist. Such payments were outside the scope of VAT. By allowing the taxpayer to collect and retain the charges, the client was giving consideration, or further consideration, to the taxpayer for its parking control services under the contract. That was consideration for standard-rated supplies by the taxpayer to the landowner for VAT purposes.
1.Vehicle Control Services Limited ("VCS") appeals against the decision of the First-tier Tribunal (Judge King and Mr Barrett; ([2011] UKFTT 125 (TC); [2011] TC 00999) dismissing VCS's appeal to that Tribunal against a decision of H M Revenue and Customs ("HMRC") that certain charges levied by VCS on motorists were subject to VAT and associated assessment for periods 04/05 to 10/09.
2.VCS argues that the First-tier Tribunal was wrong, and that the correct position in law is that the payments received by VCS in respect of the charges are outside the scope of VAT either because they are a penalty or damages for breach of contract ("the contract issue") or because they are damages for trespass ("the trespass issue"). HMRC argue, first, that there is no contract between VCS and the motorists that can be subject to a breach, and secondly that VCS acquired no licence to occupy land which was capable of giving it rights to sue for trespass. HMRC submit that the First-tier Tribunal was right to find that the monies received and retained by VCS in respect of the penalties are consideration for VCS's services to the landowner with whom VCS has a contract to provide a parking control service.
3.The facts may be simply stated as follows.
4.VCS's clients ("clients") are owners or lawful occupiers of car parks or land. VCS enters into a contract on standard terms and conditions with each of the clients under which VCS agrees to provide the client with "parking control services".
5.Under the contract each of VCS and the client has certain obligations. VCS agrees to:
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(2) erect and maintain warning signs at the car park which indicate that the car park is private property for the use of valid permit holders only, and that vehicles not clearly displaying valid permits will be liable to parking enforcement procedures including the issue of parking charges, vehicle immobilisation and towing away, with consequent fees for release;
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(3) supply the client with parking...
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Vehicle Control Services Ltd v The Commissioners for HM Revenue & Customs
...car park owners; and the parking penalty charges formed part of VCS's remuneration. The decision of the UT is at [2012] UKUT 130 (TCC); [2012] STC 2065. The facts 2 VCS's clients ("clients") are owners or lawful occupiers of car parks or land. VCS enters into a contract on standard terms ......
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