The High Court has found that clamping release fees charged by Nationwide Controlled Parking Systems Limited (NCPS) are subject to VAT, ruling that the Tax Appeals Commissioner was wrong in law to decide otherwise. The court deferred making a final order until after hearing further submissions from both parties.
The case came to the High Court by way of a case stated by the Tax Appeals Commissioner, following NCPS’s appeal against Revenue’s refusal of a VAT repayment claim. The claim concerned fees from November–December 2009 and September–October 2013 and totalled €1,778,458.
The Commissioner had determined that the fees were payments in the nature of, or in lieu of, damages for trespass and did not constitute consideration for a service. Revenue challenged that determination, arguing that removing a clamp was a service directly linked to the release fee. NCPS submitted that the fees arose from enforcing property rights against trespassing motorists, rather than from a contract for a service.
Mr Justice Tony O’Connor said the clamp release operation should not be viewed solely through the lens of trespass, contract breach and common law remedies. He found that NCPS carried on an economic activity by clamping vehicles and recovering fees as continuing income. He also found legal relationships and reciprocal performance involving NCPS, motorists and the parties that engaged NCPS to manage car parks.
The court said signs and parking conditions informed motorists of the release fee, and that there was a direct link between payment of the specified fee and release of a clamp. It also considered evidence that NCPS’s arrangements with parking facility managers took account of income from release fees. The fact that the process enforced rights, or that the fee might be described under national law as a penalty or damages, did not determine its VAT treatment.
The court concluded that the Commissioner was wrong in law to determine that the relevant clamping release fees were not subject to VAT under the Value-Added Tax Consolidation Act 2010 and the EU VAT Directive. It noted that the Commissioner may not have been directed to some issues arising from the documents and conditions considered in the judgment.
The court did not make a final order at that stage. It invited counsel for both sides to reflect and obtain instructions before returning for a hearing on the order to be made under the Tax Appeals legislation. A postscript records that on 24 July 2019 the court was told all matters had been ventilated before the Commissioner and no remittal was required.