The Court of Appeal has dismissed an appeal by Nationwide Controlled Parking Systems Limited (NCPS), ruling that fees motorists paid to have parking clamps removed were subject to VAT.
The judgment, delivered on 21 May 2021 by Mr Justice Murray and Mr Justice Collins, with Mr Justice Costello agreeing, concerned a €1,778,458 VAT repayment claim. Revenue had refused the in-time portion of NCPS’s claim for VAT it had paid on clamp release fees from November–December 2009 to September–October 2013. The Appeal Commissioner allowed NCPS’s appeal, but the High Court held that the Commissioner was wrong in law. NCPS then appealed to the Court of Appeal.
NCPS manages car parks under agreements with landowners, including schools, hospitals, residential developments and shopping centres. Its signs warn that vehicles parked without the required permit or ticket, or in breach of parking rules, may be clamped and released only on payment of a stated fee. NCPS had argued that the fees were damages, or payments in lieu of damages, for trespass and therefore outside VAT. Revenue’s position was that the motorist paid NCPS for the service of removing the clamp.
The court rejected the damages-for-trespass characterisation on the evidence before it. The typical management agreements did not give NCPS a right to occupy or possess the car parks, and the court said the licensing arrangements did not establish that NCPS could sue motorists for trespass or recover more than nominal damages. It also rejected NCPS’s alternative argument that the fees were payments for an earlier parking infraction.
Instead, the court found that the fee was paid for release of the clamp. A motorist parking at an NCPS-managed car park was taken to consent to clamping if they breached the applicable rules. NCPS could require the stated fee before removing the clamp; once paid, the motorist was entitled to have it removed. The court held that this created a legal relationship with reciprocal obligations and a direct link between the payment and the service. It also concluded that NCPS was carrying out an economic activity for VAT purposes.
The Court of Appeal dismissed the appeal. It said the fees were consideration for a service to the motorist and were subject to VAT under the VAT Directive and Irish VAT law. The court’s provisional view was that NCPS should bear the costs, having been wholly unsuccessful. It gave NCPS ten days to notify the Court of Appeal office if it wished to dispute that view; a hearing would then be directed. The judgment did not record a final costs order.