Other local authority activities: miscellaneous (A to E): car parking
Authorisation for parking on a public highway can only be granted by a local authority. This is in its capacity as a highway authority using powers provided in the Road Traffic Act 1988 and the Road Traffic Regulations Act 1984. Therefore any income from sources such as parking meters, the issue of permits in controlled parking zones and the like is non-business as there is no competition with the private sector.
Following the Court of Appeal judgment in Isle of Wight Council and Others (2014) UKUT 446 (TCC), off-street parking is standard rated, even if supplied by a local authority.
Parking in a country park
Local authorities have powers under the Countryside Act 1968 to designate land as a country park. The Act also permits the authority to create parking areas within the park. However, the parking areas can be run by another party. Consequently the parking income is by way of business and so is standard rated.
Parking and garaging with housing
Parking facilities and garaging provided with housing is covered in more detail at VATGPB8345. Generally provision in conjunction with council housing is non-business. There is often a limit of two parking spaces or lock-up garages per dwelling but this is purely a local authority imposed condition. The number of parking spaces provided with housing has no effect on the VAT treatment.
Excess parking changes are covered in more detail in the VAT Supply and Consideration Manual (VATSC57600) (external users can find the guidance at http://www.hmrc.gov.uk/manuals/vatscmanual/VATSC57600.htm).
A penalty charge for illegal parking is outside the scope of VAT.
HMRC’s view is that all payments for off-street car parking are consideration for a supply and so is taxable.
In National Car Parks Limited v HMRC (UT/2016/0058) the upper tribunal found that the whole amount paid by car park users was the taxable amount. VAT is therefore due on the overpayment as well as the advertised tariff.
The Upper Tribunal also concluded that the FTT decision in King’s Lynn had been wrongly decided. King’s Lynn had held that if tariffs were set by statutory order, then any overpayment must be ex gratia and therefore outside the scope of VAT. As such HMRC expects local authorities to account for VAT on the full amount received.
Please note: National Car Parks Ltd have been given permission to appeal the decision, however HMRC will uphold its policy that an overpayment in these circumstances is liable to VAT until further notice.