National Car Parks Ltd v Revenue And Customs

For VAT, a payment for parking is consideration where the contract makes parking available in return for the amount actually inserted and accepted by the machine. The payment and service have the necessary direct link, legal relationship and reciprocal performance. The taxable amount is the subjective value actually received, rather than a tariff assessed by objective criteria. The fact that the customer could have paid less with exact change, or that part of the payment is described as an overpayment, does not remove that amount from consideration. A contract may be formed when the customer presses the button for the ticket, accepting parking in return for the coins then shown as inserted.

National Car Parks Ltd operated pay-and-display car parks where machines gave no change but accepted overpayments. A customer wishing to park for one hour at a tariff of £1.40 might insert £1.50 because exact change was unavailable. NCP sought repayment of VAT accounted for on such excess payments between 2009 and 2012, arguing that they were ex gratia payments outside the scope of VAT.

The First-tier Tribunal dismissed the appeal, and the Upper Tribunal agreed, holding that the full amount paid was consideration for parking. The appeal to the Court of Appeal concerned the contractual price and whether the excess payment had the required direct link with the parking service.

The Court of Appeal, in the judgment of Newey LJ, with whom Males and Patten LJJ agreed, dismissed the appeal.

1. Under the Principal VAT Directive and the Value Added Tax Act 1994, supplies of services made for consideration are taxable and the taxable amount includes everything constituting consideration. The VAT concept of consideration has an autonomous EU-wide meaning. A supply for consideration requires a direct link between the service and payment, a legal relationship between provider and recipient, and reciprocal performance. The relevant value is the subjective value actually received.
2. The contractual analysis was objective. The tariff board and the machine’s statements that overpayments were accepted and no change was given indicated that NCP offered parking in return for coins worth at least the tariff. The contract was formed, on the best analysis, when the customer pressed the green button, accepting parking in return for the coins then shown as inserted.
3. Accordingly, where the customer inserted £1.50 for one hour’s parking, £1.50 was the contract price and the taxable consideration. The customer had no right to repayment of the excess. The result was the same even if exact change could have been obtained elsewhere. The price was not uncertain in any individual transaction; it was the amount paid, equal to or exceeding the tariff.
4. The busker’s voluntary donations in [1994] STC 509 were distinguishable because they lacked the relevant contractual relationship and necessary link. The Court expressed no final view on the correctness of King’s Lynn and West Norfolk BC v Revenue and Customs Commissioners, [2012] UKFTT 671 (TC), having not been taken to the relevant bye-law or heard argument on its implications, and did not endorse that decision.

• Court of Appeal (Civil Division): In [2019] EWCA Civ 854, the appeal was dismissed.
• Upper Tribunal (Tax and Chancery Chamber): In [2017] UKUT 247 (TCC), the Upper Tribunal upheld the First-tier Tribunal and treated the full amount paid as consideration.
• First-tier Tribunal: The appeal against HMRC’s refusal of NCP’s repayment claim was dismissed.