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VAT on car parking

02 February 2016
Issue: 4536 / Categories: Tax cases , VAT

Isle of Wight Council and others v CRC, Court of Appeal, 16 December 2015

Should local authorities be exempt from VAT on off-street car parking charges?

Four local authorities which provided off-street car parking claimed they were exempt from accounting for VAT on the income from these facilities.

HMRC said this would lead to distortion as similar privately run facilities were not exempt. After a reference to the European Court of Justice ([2008] STC 2964 and [2009] STC 1096) the proceedings were remitted to the First-tier Tribunal. It found that non-taxation of local authorities would distort competition in the off-street car parking market ‘to more than a negligible extent’. The Upper Tribunal (Tax and Chancery Chamber) supported that decision; the taxpayers appealed.

The chancellor of the High Court Sir Terence Etherton in the Court of Appeal said it was reasonable for the First-tier Tribunal to conclude that local authorities should be permitted to set off-street car parking charges with a...

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