The Borough Council of King’s Lynn and West Norfolk v The Commissioners for HMRC

For VAT purposes, an overpayment made through a local authority parking machine is consideration for the supply of parking where the signage objectively offers parking for coins worth at least the advertised tariff, states that overpayments are accepted and gives no change. The customer accepts that offer by completing the transaction.

The statutory regime governing parking charges does not prevent the authority from collecting the excess. It has not imposed an unauthorised higher charge; the customer has chosen to tender more than the tariff. The taxable amount is the value actually given and received in return for the service, including the overpayment.

The Council appealed against the First-tier Tribunal’s dismissal of its claim for repayment of VAT overpaid on off-street parking. The appeal concerned customers who tendered more than the advertised tariff because parking machines did not provide change.

The FTT held that the excess was consideration for parking, but treated the transaction as involving a customer’s counter-offer accepted by the Council. The central issues were the correct contractual analysis and whether the statutory framework governing local authority parking charges prevented the Council from collecting the excess.

1. Appeal dismissed. The overpayments were part of the consideration for the Council’s provision of off-street parking.
2. The objective contractual analysis adopted by the Court of Appeal in National Car Parks Ltd v HMRC [2019] EWCA Civ 854 was preferred. The tariff, together with the statements that overpayments were accepted and no change was given, constituted an offer to provide parking in return for coins worth at least the advertised tariff. The offer was accepted when the customer completed the machine transaction. A counter-offer analysis was artificial.
3. The statutory framework did not deprive the Council of capacity to enter into that agreement. The Council had authority under the Road Traffic Regulation Act 1984 to provide parking, impose the advertised charge and use machines to collect it. It did not impose a higher charge: the customer voluntarily chose to complete a transaction after tendering more than the tariff. The principle in McCarthy & Stone (Developments) Ltd v Richmond upon Thames LBC [1992] 2 AC 48 and Attorney-General v Wilts United Dairies Ltd (1921) 37 TLR 884 was therefore not engaged.
4. For VAT purposes, consideration has an autonomous meaning. It is the value actually given by the customer and received by the supplier in return for the service, not an objectively assessed market value. The amount paid, including the excess, was received under the legal relationship between the parties and had a direct link with the parking service. It therefore formed part of the taxable amount under the Principal VAT Directive and the Value Added Tax Act 1994.
5. Alternatively, if the statutory regime did not itself confer capacity, section 111(1) of the Local Government Act 1972 would do so. The Council’s functions included providing parking, charging for it and using machines to collect the charges. Collecting overpayments facilitated, and was conducive or incidental to, those functions.

The Tribunal held that King’s Lynn No.1 had been wrongly decided, agreeing with the Upper Tribunal’s view in National Car Parks Ltd v HMRC [2017] UKUT 247 (TCC).

• First-tier Tribunal: dismissed the Council’s claim for repayment of VAT in [2021] UKFTT 10 (TC).
• Upper Tribunal (Tax and Chancery Chamber): dismissed the appeal and upheld the conclusion that overpayments were consideration for the parking supply.