Parking penalties represented damages, not payments for services liable to VAT (Court of Appeal)
Both the First Tier-tribunal (tribunal) and the Upper Tribunal (UT) had, on entirely different grounds, found that penalties charged by a car park management company (appellant) to motorists who parked outside a designated bay or in a bay reserved for disabled drivers were services liable to VAT. The FTT found that the charges fell within the contract between the management company and the motorist for the provision of car parking, while the UTT dismissed that conclusion as an error of law, finding that the appellant had insufficient rights to the land to be able to enter a contract with the motorists and holding instead that the contract in question was between the appellant and the owner of the site.
Allowing the appeal, the Court of Appeal held that the contract for the provision of parking permits was between the appellant and the motorists, as the appellant did not have to account to the site owner for the sums charged. The motorist accepted the appellant's offer (and the conditions imposed) when he parked his car.
The Court of Appeal found that the penalties charged were damages for trespass (the appellant had the right to have the vehicle towed away) and were not, therefore, within the charge to VAT.