What parking eye are hiding

4consumerrights

Uncovered a contract which parking eye use via source which has now removed same:

Parking Eye has several dirty little secrets buried in its terms and conditions of their contract with their client (customer) - each one worthy of a new thread – here’s the first one:


Parking eye send their clients a monthly VAT bill based on the revenue from the charges collected from their “victims” who have paid. They attempt to justify this by proclaiming it to be for consideration of services provided.


Firstly as the car park management services are provided regardless of whether any parking charges are collected this is ridiculous to charge their client on this basis.

[FONT=&quot]Secondly this is VAT fraud[/FONT][FONT=&quot]. [/FONT]
[FONT=&quot] Parking eye proclaim to offer their car park management and form a contract with driver/keeper providing a service and collecting charges for breach of terms – therefore the parking charge should attract VAT in this instance and it would be Parking Eye’s responsibility to pass this payment to HMRC. [/FONT]

[FONT=&quot]It is the tertiary end-user in a chain of supply where the VAT is charged and the supplier then pays the VAT[/FONT]

[FONT=&quot]Based on one of Parking Eye’s parking charges:[/FONT]
[FONT=&quot] If a service costing £100 attracts VAT @ 20% - the provider pays £20 VAT which leaves £80 net. [/FONT]

[FONT=&quot] However Parking Eye are recovering each £20 (VAT) per £100 collected from their customer (client) but are still retaining the full £100 from the driver/keeper who has paid the charge so in effect are not paying any VAT on the parking charge at all.[/FONT]

[FONT=&quot]Parking Eye admits that they pay VAT on parking charges but don’t add them to parking charges on this thread: (tried to copy text here but didn’t work).[/FONT]
https://forums.moneysavingexpert.com/discussion/4835679 POST 12

[FONT=&quot]Quote from contract terms:
[/FONT]
[FONT=&quot]. [/FONT]

3.10 With the exception of any Additional Services (defined in Schedule 1),
ParkingEye supplies the Services and the associated Products at no additional cost,In return for the revenue defined in schedule 2 as the Charges.3.11The Parties acknowledge that the Revenue from the Charges retained byParkingEye is consideration for the Services and that the supply of the Services attracts VAT at the standard rate. As such ParkingEye will generate a monthly VATonly invoice to the Customer to reflect the additional amount to be paid in VAT inrespect of the monies received for the Services. The Customer agrees to pay allsuch invoices within thirty days of receipt on the Due Date.

https://www.whatdotheyknow.com/request/176749/response/444924/attach/2/1576738%20PE%20Terms%20and%20Conditions%20of%20Supply%20CWCBC%20Workman%20pdf%202.pdf

In case Parking eye complain about this thread - the relevant bodies will be notified shortly anyway and this is in the public interest

Trebor16

With Parking Eye being VAT registered, the invoices they send out should include VAT, so for a claim of £100 made, PE should be pocketing £83.33 and giving HMRC £16.67?

HO87

Their argument (please note: Its not my argument) goes something like this.

They do not offer the contract to park, this is offered by the landowner. They, PE, collect on behalf of the landowner a charge which is "akin to a penalty" (quote from the first VCS -v- HMRC case) due to the landowner in damages as a consequence of alleged breaches of contract that is not therefore liable to VAT.

However, at that point having collected a charge from the motorist PE retain those monies as consideration for the contract that exists between them and the landowner. As the full £100 represents the consideration it is subject of 20% VAT in toto which the landowner is then liable to pay.

Following their argument (which is based upon the outcome of the third VCS -v- HMRC case heard in the Court of Appeal) the financial construct is correct - much as we might not like it. Whether the construct is a matter of convenience or represents the reality of the relationship is another - and currently - altogether rhetorical question.

salmosalaris

AIUI and in agreement with HO87
they correctly account for VAT . However this rather betrays the true identity of the offeror of the contract and the party who suffered loss, and that is not PE but the landowner .
But PE do not bring claims on behalf of the landowner they bring them in their name for their supposed losses .


It is the switch all PPC's pull (other than those few that own the car park ) to get their hands on the dosh. It is the reason for their blizzard of rubbish , it's all a smokescreen to divert from this fundamental flaw.
The judge in PE v Sharma saw straight through it

4consumerrights

@HO87 playing along with Parking Eye's argument say:

However, at that point having collected a charge from the motorist PE retain those monies as consideration for the contract that exists between them and the landowner. As the full £100 represents the consideration it is subject of 20% VAT in toto which the landowner is then liable to pay.

They invoice their client for the VAT element as per term 3.11 of their t&c:

3.11The Parties acknowledge that the Revenue from the Charges retained byParkingEye is consideration for the Services and that the supply of the Services attracts VAT at the standard rate. As such ParkingEye will generate a monthly VATonly invoice to the Customer to reflect the additional amount to be paid in VAT inrespect of the monies received for the Services. The Customer agrees to pay allsuch invoices within thirty days of receipt on the Due Date.

So parking eye receive the VAT from their client which they then pass onto HMRC

HMRC receives the VAT so believes all to be in order yes?

Well actually NO NOT NECESSARILY because if the client is VAT registered also (as many are) they too can reclaim the VAT element from any goods or services appertaining to their business.

Therefore the parking charge which HMRC should have collected VAT on - ends up being refunded back to the client via their business expenses.

It is a very cleverly designed VAT avoidance/fraud scheme proposed by Parking Eye in which the client is implicated in by way of keeping both companies records appearing to be in order and neither actually paying the VAT.

The money received from selling keeper details from DVLA pales into insignificance from the money HMRC are missing out on.

Guys_Dad

Does this not suffer from the fact that if these are invoices and attract VAT, then should they not say so on the invoice to the motorist, who, themselves, may be VAT registered?

In addition, VAT is payable on invoices, not payments. So if a PPC issues an invoice to a motorist, VAT would be due on the amount demanded, irrespective of the amount collected. Payment not received is a bad debt.

That's how it works in business.

nigelbb

4consumerrights wrote: »

@HO87 playing along with Parking Eye's argument say:



They invoice their client for the VAT element as per term 3.11 of their t&c:


So parking eye receive the VAT from their client which they then pass onto HMRC

HMRC receives the VAT so believes all to be in order yes?

Well actually NO NOT NECESSARILY because if the client is VAT registered also (as many are) they too can reclaim the VAT element from any goods or services appertaining to their business.

Therefore the parking charge which HMRC should have collected VAT on - ends up being refunded back to the client via their business expenses.

It is a very cleverly designed VAT avoidance/fraud scheme proposed by Parking Eye in which the client is implicated in by way of keeping both companies records appearing to be in order and neither actually paying the VAT.

The money received from selling keeper details from DVLA pales into insignificance from the money HMRC are missing out on.

I don't think that you understand how VAT works. It's not fraud at all. HO87 & salmosalaris have nailed it correctly. VAT is correctly accounted for & paid (I am assuming that PE do actually pass it on to HMRC). The motorist is paying a fine, penalty or damages which is not subject to VAT. PE are providing a service to the landowner/leaseholder that is subject to VAT. The fact that the sum of all the monies that the motorists pay to PE exactly equals the sum charged to the client for parking management services is irrelevant.

hoohoo

So this is how it works.

Motorist pays liquidated damages to ParkingEye. (No VAT applicable)
ParkingEye is collecting this on behalf of the landowner, so owes this amount to the landowner.
According to the contract Landowner owes ParkingEye a service charge exactly equalling the amount collected. These two amounts cancel out...except VAT is payable on service charges, so they owe ParkingEye VAT.
The landowner (if VAT registered) reclaims the VAT paid to ParkingEye from HMRC


This is how the money aspect works.

Except now it is laid out like this two big questions arise.
1) Where exactly is the loss to the landowner? The landowner has no obligation to ParkingEye to pay any of the charges incurred in collecting. It only has an obligation to pay the monies actually collected. So if the motorist does not pay and no charges are collected, then the landowner owes parkingeye nothing.
2) If PE is collecting on behalf of the landowner, then the landowner is the real creditor. In this case all their NtKs are not POFA 2012 compliant.

salmosalaris

But most importantly , as agent, PE have no right to bring an action in their name.
It is why IMO PE's latest signs have been losing the words " on behalf of " and "parking is at the absolute discretion of the landowner" from the smallprint and why in PE cases studying that smallprint can be useful .
IMO they are using phrases now such as "solely engaged to provide a traffic maximisation scheme" and " at the absolute discretion of the site " to disguise the fact they are merely agents.

However nowhere on a PE sign I have seen do they make explicit that they are the contracting party.

nigelbb

There is an extra twist where PE are managing a pay & display car park. The ticket machines are emptied by the client who keeps all ticket money. In addition PE reimburse the client for the actual parking charge i.e. £X/hour that should have been paid by any errant motorist that PE nabs. PE use this as a selling point when proposing their services to a client that the client will receive 100% of all possible revenue.