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HMRC internal manual

VAT Government and Public Bodies

Other local authority activities: miscellaneous (N to Z): park and ride schemes


Many local authorities offer park and ride schemes. These schemes are designed to reduce levels of congestion and pollution in town centres by encouraging drivers to park out of town and continue their journey using public transport. Local authorities may operate entire schemes or work in partnership with private sector to provide the facilities

In 2007 HMRC issued an aide memoire which attempted to set out the liability of the different types of park and ride schemes using the principals of single and multiple supply. But this could not accommodate all the variety of park and ride arrangements in place.

HMRC is now conducting a comprehensive review of the VAT treatment with a view to producing fuller and clearer guidance on the issue. While the review is in progress a set of interim rules, which apply to park and ride schemes operated wholly by local authorities, were agreed with CIPFA in January 2009.

Application of Interim Treatment of park and ride schemes which are operated solely by local authorities

The interim treatment can be applied to park and ride charges where:

  • a local authority supplies both the parking and the transport
  • a single payment is made covering both of these supply elements (irrespective of where payment physically takes place), and
  • payment entitles the driver to both use the parking facilities and obtain transport for no further consideration.

In cases where charges are treated as being wholly standard rated

If a local authority is currently treating its charges as being wholly standard-rated in reliance on HMRC guidance, provided that the criteria set out above are satisfied it may opt to apportion the charges between the standard-rated car parking and zero-rated public transport. If a local authority opts to do this, it must retain evidence that:

  • demonstrates why it has concluded the charges can be apportioned, and
  • demonstrates why it considers the apportionment applied achieves a proper attribution of values between the two supplies.

In cases where charges are currently being treated as being wholly zero rated

If a local authority is currently treating the charges as being wholly zero-rated it should consider whether or not apportionment is applicable. If the local authority decides not to make any apportionment it should retain evidence demonstrating why it does not consider apportionment to be appropriate. If it opts to apportion it should retain evidence demonstrating why it considers the apportionment achieves a proper attribution of values between the two supplies.

Interim rules in cases where charges are currently subject to apportionment

Where a local authority is already apportioning its charges, that apportionment should remain undisturbed until the review has been concluded and revised guidance issued.

Action to be taken at the end of the interim period

When the park and ride review has been completed HMRC expects that all local authorities will compare their treatment of their park and ride charges with the information set out in the new guidance. Where there is a difference in VAT treatment HMRC will expect local authorities to apply the revised guidance from the date of its publication.

Disputed treatment

In the event that HMRC does not agree with any local authority’s VAT treatment of park and ride charges it will not take any retrospective action but, where applicable, will issue assessments from the date of the publication of the new guidance.