Wrong change

Output tax due on overpaid car parking fees

The issue concerned whether voluntary payments in excess of car parking charges were consideration for a supply of services and subject to VAT. HMRC said they were and refused the taxpayer’s VAT repayment claim. The situation arose when a customer did not have the correct change for say an hour’s parking and therefore overpaid because the payment machine did not give change.

A similar situation arose in King’s Lynn and West Norfolk Council (TC671). The tribunal in that case decided in favour of the council because it was restricted in the amount it could charge for parking because of a statutory order. The instant case concerned car parks run by NCP Ltd which is a commercial business and is not restricted on how much it can charge. However despite the tribunal accepting that a customer would be unaware of that...