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Was output tax due on overpayments for off-street parking?

By Andrew Needham, February 2023

The appeal to the Upper Tribunal concerned the VAT treatment of off-street parking provided by local authorities where charges for parking were collected by machines which did not offer change, and the VAT treatment of ‘overpayments.’ 

The appellant argued that the scope of their powers to provide car parking places and charge for their use was governed by Article 6(1) of the 2015 Order and that the First-tier Tribunal (FTT) applied a flawed contractual analysis that led it wrongly to conclude that the ‘overpayment’ represented part of the consideration for the supply of parking services. In particular, the FTT erred in concluding that the appellant entered into a contract with the driver to charge a larger amount (that included the overpayment) for the supply of parking services in circumstances where they had no statutory authority to enter into such a contract. 

HMRC submitted that the correct interpretation was

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