Court rules against carpark operator’s stance not to pay VAT on clamping fees
DUBLIN: The court has ruled against the country’s largest carpark operators’ position not to pay VAT on clamping fees. The carpark operator failed in appeal over tax exemption on clamp fees. The ruling marks the end of a long-running legal battle with Revenue. It also ordered that the €1.8 million in VAT levied by Revenue on the clamping fees not be refunded.
The case demanded a refund of the VAT collected by Revenue on the clamping fees. The court dismissed an appeal filed by National Wide Controlled Parking Systems (NCPS) against a High Court ruling last year in this regard.
The Court of Appeals stated that the clamp-release fee cannot be considered as damages for trespass or a payment in lieu of such damages. The decisive judgment was made by Mr. Justice Brian Murray and Mr. Justice Maurice Collins, with Ms. Justice Caroline Costello.
According to the Court of Appeal, the remedy for vehicles parked without permission or in violation of parking rules is the immobilization of the offending vehicle through clamping. “In our opinion, the payment is clearly a payment for the release of a clamp,” the court said.
The Tax Appeals Commission’s finding that no VAT was collected on fees issued for the release of clamped vehicles in private carparks such as shopping centres, train stations, hospitals and apartment complexes was deemed to be incorrect.
The case was started in January 2014. This was after the NCPS demanded a refund of VAT paid for the payment of release fees from November 2009 to October 2013. The dispute was over €1,778,458.
Revenue rejected NCPS’s application for a VAT refund based on the rclamping release fees service provided for de-clamp vehicles under European Union and Irish tax laws. Lawyers for NCPS had argued that the clamping release fee was “a payment in the nature of or in lieu of damages for trespass” and hence not a taxable service.
The Tax Appeals Commission (TAC) had ruled that the purchase of a permit or parking ticket constitutes an agreement between the NCPS and a motorist. Revenue attorneys argued that the NCPS had a right to the carpark but it was not a possession and therefore could not be claimed for trespass. They further claimed that NCPS offers a service in the form of releasing a clamp in return for the payment of a release fee.
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