Parking & VAT

HadynB

Hi

I was looking for some guidance as to the rules on parking and VAT, which I believe to be a can of worms. I understand there is no VAT on on-street parking, but do you treat this as zero rated, exempt or out of the scope of VAT.

I am also led to believe that, until matters are sorted, some councils charge VAT for their off street parking and some do not, those who do not, are they zero rated, exempt or out of the scope.

Many thanks.

Jon_1984

As a rule of thumb i work on the basis that if the ticket shows a VAT reg i claim back VAT, otherwise I dont.

sheelagh

Parking and VAT

I agree with HaydnB -
on street parking meters - no VAT
off street parking - some are , some aren't.

I would account for standard rate VAT on parking ticket with a VAT number. See section 19.7.5 of The VAT Guide (Notice 700), which states that a VAT receipt is not required for expenditure under £25.00. You might not need a receipt, but you do need to know the VAT status and location of the car park.

The VAT Guide states that on street parking meters are "not subject to VAT" - I guess this mean "outside the scope", but I'm not certain.

It's not always easy to tell if the ticket is from an on-street or off-street car park. I have seen parking tickets with a VAT number which I know are issued "on-street".

Just another mine field but hopefully a small one.

payrollpro

You certainly have opened a can of worms here.

The situation with on street parking is right, no VAT, and I believe it has to be classified as OOS. With off street car parking it depends who runs it, local authority or private? If it is a private company then it is a taxable supply so it all depends if they are registered or not but local authority off street is supposed to be OOS, however there are outstanding challenges to this, mainly by Isle of Wight Council but a few other as well.

My last reading of the cases was that if the ticket is issued by a local authority and it has a VAT number on it the recipient is allowed to assume that the charge includes VAT unless it was on street parking in which case the payer is supposed to know it is outside of the scope of VAT. Once the challenge is dealt with (?) we are apparently going to have the defnitive word on VAT.

The revenue view is that parking provision is a taxable supply but that local authorities cannot provide the service in a taxable form unless they contract with a private company to do the work for them, does that make sense? The IoW challenge was about the confusion created when a local authority has mixed provision, on street, off street directly provided, off street provided through a private contractor and off street provided through a licence to a private provider.

Bit of a mess but i agree with the comment that if the ticket has a valid VAT number on it just to assume that the charge includes it, that is what I do and my VAT audits have accepted it.

Payrollpro

payrollpro

For anyone still following this I have made some enquiries and found out that the challenges are still on going, mainly from two local councils, and have been for many years.

The situation is as I described and is as confused as that though considering the individual sums involved customs seem to avoid challenging any indivdual claim and look, instead, as if they are dragging their heels in respect of the overall position.

Not satisfactory for any of us, my view is that if they can sort out what a flapjack is they can sort this out.

Payrollpro

HadynB

Wow, can o worms a plenty. I'm just studying VAT in my AAT so lots of questions arising and this was one of them that just didn't seem to have a straight forward answer, and still seems as though there are many different views. Thanks for your replies though as at least I know I'm not on my own in thinking how overcomplicated the whole topic is.

Another brain teaser (or not if your an expert at this) - how would you treat 'sales' between the same company but different divisions. I.e. same company VAT number but goods are transferred (both in the UK but invoices are issued for audit purposes). We currently view the sales as zero rated but I'm not so sure that they have anything to do with VAT given that we are one in the same?

payrollpro

I would not classify myself as a VAT expert but I cannot help feeling your employers are overcomplicating things.

There is no taxable supply so you are right VAT is irrelevant and as long as the "sale" by the receiving division is treated correctly for VAT purposes then there is no issue.

Issuing invoices seems a bit OTT because, as you have seen, these have to be classified for VAT purposes even if a supply of goods hasn;t actually occurred. Putting ZR merely, to me makes it worse.

If it was me I would scrap the false invoicing process and stop cluttering up the accounts with irrelevant transactions and instead have a system of goods transfer documents, electronic of course, which creates the audit trail for items moving from one part of the organisation to the other. To me this isn't a VAT matter, it's a management, control and checks issue.

Payrollpro

oakley

I presume the sales between divisons are also across different sites, not that it makes a difference. If you are 'selling' to a company with the same VAT number you can zero rate the supply, both divisions will have to submit a joint VAT return which will effectively eliminate the interco sale.

Poodle

oakley wrote: »

I presume the sales between divisons are also across different sites, not that it makes a difference. If you are 'selling' to a company with the same VAT number you can zero rate the supply, both divisions will have to submit a joint VAT return which will effectively eliminate the interco sale.

Hi

I do not agree with this. If you zero rate the transactions then they will be included in your VAT turnover and you do not want that.

You must treat them as outside of the scope for VAT. The most common way that I have seen is to journal through inter co loans on the balance sheets as one goes up the other goes down. If you reconcile the loan accounts regularly to ensure the balances remain the same but one Dr and one Cr then theoretically all entries should be accounted for.

HadynB

Thanks for your replies. I agree it seems a little strange issuing invoices, but it's one of those things that has been happening for a while and I can only make so many waves:)

Thanks again