Local councils in the UK could be refunded up to £1m each, following a
landmark ruling against HM Revenue & Customs over VAT payments on off-street
parking. But they will need to act fast to avoid capping.
HMRC faces the prospect of refunding more than £500m in VAT payments made by
local authorities, which in turn could reduce the forecast increase in council
tax bills in England by half, according to the government’s own figures.
After a long-running legal battle, the London VAT and Duties Tribunal ruled
in favour of the Isle of Wight council and other local authorities in their
appeal against HMRC’s ruling that off street parking provided by local authories
is subject to VAT at 17.5%.
But tax consultants Chiltern have so far only submitted claims on behalf of
15% of total local authorities. The remaining 85% will have to get their claims
in quickly if they wish to avoid the prospect of being capped to the last three
years by the Office of the Deputy Prime Minister.
Furthermore, Chiltern’s director of VAT, Mark Welby, points out ‘given that
it has already taken five years to reach this point, we would hope that HMRC
would accept this latest rejection of their argument. Unfortunately we believe
it more likely that they will appeal, leaving the situation more uncertain for
HMRC said in a statement that it would examine the tribunal decision
carefully before deciding whether to appeal.
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