Exempt supply — Grant of interest or right over land — Land adapted for use as car park — Land let without user restrictions to car-park operator — Whether supply excepted from exemption as being a grant of facilities for parking a vehicle — Group 1 of Schedule 9 to Value Added Tax Act 1994 — Commissioners’ claim allowed
The defendant taxpayer held a plot of land in Leicester (the site) under a lease that, like previous leases granted in respect of the site, limited its use to the parking, hiring and maintenance of vehicles. On 3 May 1999, the defendant entered into an agreement (the 1999 agreement) with a partnership, trading under the name of Leicester Central Car Park (LCCP), which had been permitted by a previous lessee to conduct a pay-and-display parking business on the site. By the 1999 agreement, the defendant purported to let the site, save for certain reserved spaces, to LCCP for a term of three years at a monthly rent of £2,500 (the rental). The agreement made no mention of car parking and contained no restrictions on use. Thereafter, LCCP continued to use the unreserved spaces for its pay-and-display parking business.
In or about May 2002, the defendant appealed to the VAT and Duties Tribunal against a decision by the claimant commissioners that VAT was payable on the rent. The tribunal allowed the appeal, holding that: (i) the relevant supply was exempted by Group 1 of Schedule 9 to the Value Added Tax Act 1994, being a “grant of [an] interest in, or right over, land”; and (ii) no exception to the exemption could be made under para 1(h), which referred to “the grant of facilities for parking a vehicle”. The latter holding was based upon the finding that the defendant had, by the 1999 agreement, supplied an unfettered use of the site, it being immaterial that it had been laid out as a car park since 1995. The commissioners challenged that decision.
Held: The claim was allowed.
Applying the law as declared by the European Court of Justice in Svenska Staten v Stockholm Lindopark AB (C150-99) [2001] ECR I-493 and Skatteministeriet v Henriksen (C173/88) [1990] STC 768, the tribunal had fallen into error in: (i) failing to consider the nature of the land in question; (ii) seeking an irrelevant factor, namely a stipulation limiting the use of the land to car parking: Commissioners of Customs & Excise v Trinity Factoring Services Ltd [1994] STC 504 applied. Nor could the defendant contend that the exception was limited to those who provided a parking facility to the ultimate customer or motorist, the object of the exception being the grant of the facilities, not the type of person who ultimately made use of them.
Andrew Macnab (instructed by the solicitor to the Commissioners of Customs & Excise) appeared for the claimant; Andrew Young (instructed by Bark & Co) appeared for the defendant.
Alan Cooklin, barrister
