VAT – Car Parking
HMRC have published a Business Brief which relates to parking in non-local authority car parks. The Brief confirms that excess or penalty charges levied in car parks which were previously treated as subject to VAT are now treated as outside the scope of VAT.
HMRC have identified the following as the most common situations where excess or penalty charges are made:-
- no parking ticket on display
- overstaying purchased parking time
- returning within a specified time
- parking outside marked bays
- parking in bays set aside for disabled drivers or parents with children
However, there are still cases where the payment will be consideration for use of the facilities and subject to VAT. This would be where the parking terms and conditions make it clear that the driver can continue to use the facilities after a set period upon payment of a further amount without being in breach of the contract.
In cases where parking site owners contract out the management and operation of their parking sites and allow the contractor to retain all or part of the penalties collected, any such payments retained by the contractor will be subject to VAT.
HMRC is accepting claims from businesses that have previously overpaid VAT through compliance with the former policy. Any such claims are subject to normal VAT rules and capping, as appropriate.