Top court sides with HMRC as NHS hospitals liable for VAT on parking fees
HMRC brought a case against a branch of NHS hospitals to the Supreme Court over whether VAT should have been charged on hospital car parking fees, and they’ve succeeded.
Today marks the end of a five-year legal battle through each court stage over VAT on parking tickets used by patients, visitors, and hospital staff at 14 hospitals belonging to Northumbria Healthcare NHS Foundation Trust.
The NHS Trust provides pay-and-display car parking at its hospitals, including North Tyneside General Hospital and Northumbria Specialist Emergency Care Hospital, and accounts for VAT at the standard rate (20 per cent) on the parking fees it charges.
The parking fees vary, but were noted to range from £2 per hour to £6 for a 24-hour stay.
In 2017, the Trust submitted a claim to HMRC for the repayment of VAT (totalling £267,443.92), but HMRC considered that VAT was chargeable on the car parking supplies and refused the claim.
VAT appeals dismissed
According to the tax code, VAT is charged on the supply of goods and services. However, there is an exception where a public body is supplying a service if it is ‘acting as a public authority’. If the exception applies, the public body is not treated as a taxable person and does not charge VAT on its supply of the relevant goods or services.
The NHS Trust appealed to the First-Tier Tribunal, but its appeal was dismissed. It then appealed to the Upper Tribunal, which also dismissed its appeal.
The case was then taken by the NHS Trust to the Court of Appeal, which last year allowed the NHS Trust’s appeal on all grounds, setting aside both Tribunals’ decisions, and allowing the Trust to seek its VAT back from the tax authority.
HMRC swapped places and became the appellant, bringing the case to the Supreme Court.
However, unanimously, the Lord Justices found that the NHS Trust failed to prove it was “acting as a public authority” under a Special Legal Regime.
As a result, the top court allowed HMRC’s appeal against the Court of Appeal’s findings, putting an end to the NHS Trust’s £267,443.92 VAT recovery.
A HMRC spokesperson said: “This ruling has determined that whenever an NHS Trust decides to charge for car parking, VAT is due. We will continue to engage with NHS bodies to consider the effects of this recent Supreme Court hearing.”
Jason Massey, associate director at Andersen, stated the Supreme Court “has provided clarity” on how a public body can act as a public authority. He also added that the FTT “had sufficient evidence in this case”.