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Car park VAT battle rages on

by Judith Tydd

18 Sep 2008

Councils are set to return to the High Court for the culmination of their £130m VAT battle with
HM Revenue & Customs over off-street parking.

The ECJ this week suggested that the issue should be decided on an ‘activities’ basis rather than a council-by-council basis.

Four councils ­ the Isle of Wight, Mid-Suffolk, South Tyneside Metropolitan and West Berkshire ­ appealed to HMRC over the issue, saying they should not pay VAT as they are public bodies.

HMRC argues that since they compete with private sector car parks, they should pay VAT to avoid a distortion of competition.

Marc Welby of BDO Stoy Hayward said: ‘It’ll impact much more… not so much just car parking, but on other areas where the activities of the private trader are exempt, whereas a public body does get a refund of VAT.

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