Why taxman may pocket £50,000 in parking fees (From The Northern Echo)

Why taxman may pocket £50,000 in parking fees

6:00am Saturday 14th November 2009 in

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MORE than 15 per cent of money raised through controversial car park fees in Hambleton could end up in the Government’s pocket, it has emerged.

A legal case under review could see all councils in the UK forced to pay VAT on the revenue raised from car parks.

At the current 15 per cent rate of VAT, an estimated £50,000 of revenue collected in car parks in Bedale, Northallerton, Thirsk and Stokesley could be lost to the tax man.

This would rise to £58,300 once the rate returns to 17.5 per cent in January.

Hambleton District Council said it has always known about the risk of being made to pay VAT and is prepared to hand it over, but campaigners against the charges say it shows the fees were not thought through properly.

HM Customs and Revenue (HMRC) says off-street car parking is classed as a business activity that generates income, which should be subject to VAT.

It is this position that is under appeal by several UK councils, in the European courts.

Council leader Arthur Barker said: “When we were discussing bringing in parking charges back in 2008, this was something that we took into account as a worst-case scenario.

“We are not paying HMRC at the moment because of the legal case, but we are putting an equivalent amount away in a holding account so that we are ready if the decision does go against us.

“Parking charges have only been in place for four weeks, so we cannot say if we are going to hit our budget target of £450,000, despite potentially having to pay the tax, but we are hopeful.

“Saying that, if the case goes in favour of councils then we have an extra £50,000.”

The news about the potential VAT charges has been greeted with dismay by campaigners who were against the introduction of the fees.

Marcus Grover, who led the campaign, said: “This is beyond comprehension.

“It is all very well councillors being glib about £50,000, but if any other business made this kind of mistake we would be done for and could not go cap in hand to the taxpayer for some more.”

Northallerton town councillor Jack Dobson said: “I would hope that the VAT levied on the car parks would not be passed on to the public, who are already struggling enough at the moment.

“I would question whether the council took this properly into account before it levied the charges.”