Consumer Rights Act Guidance

Timothea

IamEmanresu wrote: »

Drop the VAT argument or read HMRC v VCS where it was all explained.

There is also another HMRC v VCS case not widely reported which took place in the Upper Tier Tax Tribunal which covers this as well.

I have read the decision of the Upper-tier Tribunal [2012] UKUT 129 (TCC). VCS successfully appealed the decision of the First-tier Tribunal that parking enforcement charges were a taxable supply. The key finding in this case was:

44. We accordingly find that, contrary to the finding of the First-tier Tribunal in this respect, there was no contract between VCS and the motorist.

Based on this finding and a rather contrived triangulation argument by which VCS collected damages on behalf of the landowner, all of which VCS retained, the Upper-tier Tribunal decided that there was no taxable supply. This seems to be a very odd conclusion, but perhaps tax tribunals are often like this.

In PE v Beavis, the Supreme Court agreed with the lower courts (in 94) that there was a contract between PE and Beavis. The Supreme court also ruled (in 98) that PE's parking charge could include an element of profit. These two facts should blow the Upper-tier Tribunal's decision out of the water but, realistically, it would require HMRC to make another attempt to overturn that decision.

The more interesting point is to use the Upper-tier Tribunal's finding as a defence that there was no contract, or if there was a contract then parking enforcement charges must be a taxable supply (and the PPC is therefore evading VAT).

System

The more interesting point is to use the Upper-tier Tribunal's finding as a defence that there was no contract, or if there was a contract then parking enforcement charges must be a taxable supply (and the PPC is therefore evading VAT).

Have to disagree again. There is a contract with the motorist as explained in the later Beavis case. It's a secondary one. See Beavis to find out.

By all means go along to a court and argue

a) the UTT found there to be no contract while the Supreme Court found there was with the Supreme Court having the edge here

b) There is VAT on damages for breaches of contract which the UTT found there isn't.

Come back when you've tested these arguments at bit more.

With regards to (b) it will come as a great surprise to a number of companies who have had VAT refunds on the subject especially holiday and hotel companies that rely on the income stream from people cancelling bookings at the last minute - a classic damages for breach of contract.

Ruurb

I have to agree with Iamemanresuon this. There is no VAT on damages awarded by a court nor is there VAT applicable on damages for breach of contract. HMRC has issued a VAT guidance note on VAT and damages for breach of contract.

Just going back to the point made about regulation 13 of the the VAT regulations, it refers to a taxable supply to a taxable person - a taxable person is generally considered another business, sole trader, partnership etc. Not a consumer.

Computersaysno

Ruurb wrote: »

...- a taxable person is generally considered another business, sole trader, partnership etc. Not a consumer.

Simply tell the PPC that you need a VAT invoice/receipt as you need it for work to reclaim the charge via petty cash.

beamerguy

Computersaysno wrote: »

Simply tell the PPC that you need a VAT invoice/receipt as you need it for work to reclaim the charge via petty cash.

You don't need to give a reason, no different to asking for
a VAT receipt when you buy petrol

It's no skin off the PPC's nose ..... that's if they play the VAT rules

System

I'm somewhat bewildered that when people are informed that there is no VAT on parking charges that some will continue to ignore the small detail of HMRC guidance on the matter.

Rather than persist with the myth why not read this

https://www.lexisnexis.com/uk/lexispsl/disputeresolution/document/393774/5BS3-RTJ1-F18D-035C-00000-00/VAT-treatment-of-damages-and-compensation-payments

The rules are complex but concentrate on the comment "If it is purely compensatory, it will be outside the scope of VAT."

Loadsofchildren123

I thought PPCs argued that these are contractual charges they are recovering, not damages.

System

Have a read of the whole case especially the first bit - Cavendish Square Holding BV (Appellant) v Talal El Makdessi (Respondent)

Both cases concerned the issue of what amount can be claimed for damages from a breach of contract. Was it GPEOL or something else. So both cases were solely on the issue of whether there could be extravagant damages claimed or not. The answer was "any amount" as long as it met the needs of the contractual parties to have the contract settled (and not breached). The amount is analogous to a gun to the head but without pulling the trigger.

The ParkingEye issue was slightly different in that they shoehorned the concept of a secondary contract into the deal as normally parties who are strangers to the original contract can't claim damages. So you have the triangular arrangement of the occupier offering parking on the understanding (the secondary contract) that if the breach the original contract (primary contract) you pay an amount to this third party called ParkingEye. But the amount is compensation by way of damages for the original breach.

Simple ... and no VAT is payable.

Have a look at some of the invoices that PE raises for NHS Trusts.

whiskeytoothpaste

Recent VCS signage in my case seems to include the transparency but are incredibly ambiguous with 3 differing versions. However, my intention is not to hijack here but to say that I found it interesting that in teeny-tiny print their sign says ‘VAT may be included’
Despite their recent HMRC wrangling. They seem to want to sit on both sides of the law at every opportunity

muleskinner

Another point to add to this is that PPCs don't always argue that the charge is for breach.

In my case, which is a classic 'you can't park here but if you do...' forbidding contract scenario, the PPC seems to have realised it doesn't really have a leg to stand on arguing the charge is for breach of contract (as it would be impossible to enter into the contract without breaching it) and are instead arguing the charge is simply a 'consideration for parking'. If this was the case VAT would definitely be due.

A large amount of IPC signage seems to be worded in this way, so if PPCs are claiming charges on this basis and not accounting for VAT they are acting fraudulently.