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 appeal of Isle of Wight Council (LON/00/0653) it is now accepted that off-street parking is provided under provisions in the Road Traffic Regulations Act 1984. However, any landowner is able, subject to planning permission, to offer parking facilities. Consequently there would be significant distortion of competition if local authority provided parking were not treated for VAT purposes in the same way as parking facilities provided by a private operator. This point is to be considered in a further Tribunal hearing of the Isle of Wight appeal.
Item 1(h), Group 1 of Schedule 9 to the VAT Act 1994 specifically excludes ‘the grant of facilities for parking a vehicle’ from being an exempt supply. As a result off-street parking is to be treated as a standard rated supply whether the income is collected by machine or invoiced for as a season ticket.
A comprehensive guide to off-street parking issues (Off Street Car Parking Aide Memoire) is available to HMRC colleagues from the Public Bodies Unit of Expertise (see VATGPB1600).
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 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.
A motorist may pay more than is required for a parking space. This can occur, for example, when using a payment machine (for example a parking meter) that does not give change. In these circumstances the amount actually paid is the consideration. This is non-business for on-street parking and standard rated for off-street parking.