VAT Value Of Consideration
Were Overpayments Of Parking Charges Voluntary Payments And Outside The Scope Of VAT Or Additional Consideration For The Supply Of Parking?
National Car Parks (NCP} appealed to the Upper Tribunal from the FTT regarding pay and display car parks with machines that accept payment in cash. Where customers do not have the correct change to pay the exact amount stated on the tariff board, they must, if they wish to park, put in more than the amount due as the ticket machines do not give change.
NCP made a claim for repayment of overpaid VAT in respect of overpayments of car park tariffs by customers using NCP’s pay and display car parks. HMRC refused the claim on the grounds that the overpayments ‘should be regarded as consideration and are therefore taxable’. NCP appealed to the FTT on the ground that the overpayments were not a consideration for any supply but ex gratia payments outside the scope of VAT.
The FTT held that the full amount, including any excess, paid by the customer was a consideration for the taxable supply of the right to park and therefore the appeal was dismissed. If the customer does not have the correct change and inserts coins to a value above the tariff displayed, the machine does not grant any additional parking time to the customer regardless of overpayment. The ticket issued to a customer states the full amount paid, including any overpayment. The FTT held that the excess payments made by the customer to NCP were not voluntary because the customer was required to pay at least the amount specified in order to park their vehicle. The only sense in which the payment could be said to be ‘voluntary’ was that the customer could decide not to buy a ticket, which would mean not parking the car and having to go elsewhere.
The Upper Tribunal decided that the meaning of consideration for VAT purposes was the value actually given by the customer in return for the service supplied and actually received by the supplier, and not a value assessed according to objective criteria. The Upper Tribunal accordingly dismissed the appeal.
National Car Parks Limited v Revenue and Customs [2017] UKUT 247 (TCC)
