Car parking overpayments
The taxpayer operates pay and display car parks. A person parking their car in one of the taxpayer’s car parks is required to purchase and display a ticket. The customer is notified by the instructions on the front of the pay and display ticket machine that the machine does not give change - “No change given, overpayment accepted”. If the customer does not have the correct change and inserts coins to a value above the tariff displayed, the machine will not recognise any additional parking time. The hypothetical example used is a tariff of £1.40 for up to one hour and a customer with limited change who pays £1.50. The taxpayer submitted a claim based on the fact that it should only account for VAT on the £1.40. HMRC refused the claim and the taxpayer appealed. The earlier FTT dismissed the taxpayer’s appeal concluding that there was a link between the full payment and the service provided. The FTT added that the customer knew what they were paying for the service and had just made a bad bargain. The FTT noted the similar Kings Lynn FTT where overpayments in local council car parks were found to be outside the scope of VAT. However, the FTT effectively distinguished this on the basis Kings Lynn’s charges were fixed by Statutory Order. On appeal, the UT focused on Article 73 of the VAT Directive, which provides that the ‘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,’. In finding again for HMRC, the UT concluded that the contract is formed when the customer inserts the money into the machine and if a customer pays £1.50 that is the amount received by the supplier and that is the taxable amount for VAT purposes.
The CoA differed slightly on the contract point, concluding that the contract was entered into when the customer clicked the green button. The pressing of the green button would represent acceptance by the customer of an offer by NCP to provide an hour's parking in return for the coins that the customer had by then paid into the machine whether this was the exact £1.40, £1.50 or another combination of coins. The CoA determined that if a customer chooses to pay £1.50, that amount is the value given by the customer and received by the supplier in return for the right to park for up to an hour. On this basis the taxpayer’s appeal is dismissed.
Whilst some of the reasoning and comments has varied, the taxpayer has now lost at every stage of litigation. Whilst an appeal is likely, the Supreme Court may refuse permission to appeal meaning this is the end of this piece of litigation. The earlier UT stated that the earlier similar King’s Lynn FTT decision was wrong. This concerned overpayments in council run car parks. The CoA did not hear arguments on this point but indicated that it would have been unlikely to have ‘endorsed’ it.