Nationwide Controlled Parking Systems Ltd v Revenue Commissioners

• Jurisdiction: Ireland
• Judge: Mr. Justice Murray,Mr. Justice Collins
• Judgment Date: 21 May 2021
• Neutral Citation: [2021] IECA 150
• Docket Number: Court of Appeal Record No. 2019/393
• Year: 2021
• Court: Court of Appeal (Ireland)

Between

Nationwide Controlled Parking Systems Limited

Appellant

and

Revenue Commissioners

Respondent

[2021] IECA 150

Costello J.

Murray J.

Collins J.

Court of Appeal Record No. 2019/393

High Court Record No.2018/154R

THE COURT OF APPEAL

CIVIL

Case stated – Clamping release fees – Value added tax – Appellant appealing against a decision of the High Court – Whether the Commissioner of the Tax Appeals Commission was correct in law to determine that clamping release fees are not subject to value added tax in accordance with s. 3 of the Value-Added Tax Consolidation Act 2010 and Article 2 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax O.J. L347/1 11.12.2006

Facts: The appellant, Nationwide Controlled Parking Systems Ltd (NCPS), appealed the refusal by the respondent, Revenue Commissioners (Revenue), of a repayment claim on the 16th January, 2014, for value added tax (VAT) paid on clamping release fees in respect of the periods November-December, 2009, and September-October, 2013. Revenue refused the repayment claim on the basis that the clamping fees were subject to VAT in accordance with s. 3 of the Value-Added Tax Consolidation Act 2010 and Article 2 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax O.J. L347/1 11.12.2006. The total claim in contest was €1,778,458.00. Commissioner Gallagher of the Tax Appeals Commission, in her determination, concluded in favour of NCPS. The Commissioner, at the request of Revenue, pursuant to s. 949AQ of the Taxes Consolidation Act 1997, stated a case to the High Court on 2nd July, 2018, in relation to her determination dated 16th March, 2018. The specific question was: “Whether, upon the facts proved or admitted, I was correct in law to determine that clamping release fees are not subject to VAT in accordance with [s. 3 of the 2010 Act and Article 2 of the 2006 Directive].” The High Court (O’Connor J) held that the Commissioner was incorrect in law in the determination she reached ([2019] IEHC 524). NCPS appealed to the Court of Appeal against that decision.

Held by Murray and Collins JJ that the centrepiece of NCPS’s argument as to why the clamping fees the subject of the proceedings were not subject to VAT was that they were in the nature of damages for trespass and paid by vehicle owners to NCPS as such. They held that the Commissioner erred in accepting that argument. They held that the correct legal characterisation of the transaction whereby a motorist whose vehicle has been clamped pays NCPS to remove the clamp is that of a service provided by the latter to the former. Insofar as the decision of the Court of Appeal of England and Wales in Vehicle Control Services v Revenue and Customs Commissioners [2013] EWCA Civ 186 decided otherwise it was, in their view, confined to its own facts and context and in any event appeared to have been overtaken by the decision of the United Kingdom Supreme Court in ParkingEye Ltd v Beavis which was heard and decided together with Makdessi v Cavendish Square Holding BV [2015] UKSC 67. They held that the removal of the clamp was a “service provided to the car owner” in consideration of the payment of the release fee and that fee is properly regarded as subject to VAT.

Murray and Collins JJ held that the appeal should be dismissed. NCPS having been wholly unsuccessful in the proceedings, it was their provisional view that it should bear the costs accordingly.

Appeal dismissed.

NO REDACTION NEEDED

JUDGMENT of Mr. Justice Murray and Mr. Justice Collins delivered on 21 ^st May 2021

INTRODUCTION

1 . Article 2(1)(a) of the Council Directive 2006/112/EC on the common system of value added tax (“ the VAT Directive”) provides that “ the supply of services for consideration within the territory of a Member State by a taxable person acting as such” shall be subject to VAT. Article 9 of the VAT Directive defines a taxable person as “ any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.” These provisions are given effect to in Irish law by the Value-Added Tax Consolidation Act 2010 (“ VATCA”) and in particular s. 3 of that Act.

2 . Nationwide Controlled Parking Systems Limited ( “NCPS”) provides car park management services to owners of car parks throughout the State. The nature of those services is described in detail below. Cars parked in such car parks without a required parking permit or ticket, or otherwise parked in breach of applicable parking rules, are liable to be immobilised by the attachment of a “ clamp” by NCPS. The clamp is released by NCPS on payment of a stipulated charge by the motorist. The net issue presented in this appeal is whether the release of clamps by NCPS constitutes the supply of a service subject to VAT, so that VAT is chargeable on the clamp release fees.

3 . NCPS accounts for VAT on revenue earned from the sale of parking permits and parking tickets. It also originally accounted for VAT on the clamping release fees received by it. However, in January 2014, it made a claim for repayment of VAT paid by it in respect of the periods from November to December 2009 to September to October 2013. Part of this repayment claim was refused by the Revenue Commissioners on the basis that it was excluded by s. 99(4) VATCA (which requires that a claim for a refund be made within 4 years after the end of the taxable period to which it relates). No issue arises in relation to that aspect of the Revenue Commissioner's decision. That part of the repayment claim made within time – totalling €1,778,458 – was refused by the Revenue Commissioners on the basis that the clamping release fees were subject to VAT and thus no repayment was appropriate. NCPS disputed that aspect of the decision and duly appealed it to the Appeal Commissioners pursuant to s. 119(1)(h) VATCA.

4 . NCPS's appeal against that decision was successful, for the reasons set out in the determination of Commissioner Gallagher dated 16 March 2018 (“ the Determination”).

5 . By case stated dated 2 July 2018 ( “the Case Stated”), the Commissioner stated and signed a case for the opinion of the High Court in accordance with section 949AQ Taxes Consolidation Act 1997 ( TCA) in the following terms:

“Whether, upon the facts proved or admitted as above, I was correct in law to determine that clamping release fees are not subject to VAT in accordance with section 3 of the VATCA 2010 and Article 2 of Council Directive 2006/112/EC.”

6 . The High Court (O'Connor J.) held that the Commissioner was incorrect in law in the determination she reached ( [2019] IEHC 524). This is NCPS's appeal against that decision.

THE FACTS

7 . It is the function of the Commissioner to make appropriate findings of fact. The scope of the power of the High Court or of this Court to review such findings is limited: Mara (Inspector of Taxes) v. Hummingbird [1982] ILRM 421, Ó'Culacháin v. McMullan Brothers Ltd [1995] 2 IR 217 and MacCarthaigh v. Cablelink Ltd [2003] 4 IR 510. Here, there does not appear to be any material dispute about the findings of primary fact made by the Commissioner, though the parties differ about the proper characterisation and status of certain of her conclusions.

8 . As the Case Stated explains, NCPS operates pay and display and barrier-controlled car parks under licence from various landowners such as schools, third level institutions, hospitals, private residential developments and shopping centres. While the provisions of the specific agreements vary from location to location, they typically involve the payment to NCPS of a management fee (though in some instances the management fee is waived) and the granting to it of the entitlement to collect and retain some or all of the parking fees imposed on motorists using the relevant car-parking facilities.

9 . Signage erected by NCPS advises motorists availing of these facilities of the terms and conditions of use (to which, for convenience, we shall refer as the “ parking rules”). Depending on the specific location in issue, these may involve limitations on the periods of time for which vehicles may be parked and restrictions on the areas in which parking is permitted. Where parking is by permit, and subject to specific exceptions, persons entering the properties are advised that they may only park a vehicle on which a valid permit is displayed.

10 . As part of the parking control service it provides, NCPS agrees to monitor the premises and to clamp vehicles parked in breach of the parking rules, this being effected by means of the affixing of a clamp that immobilises the vehicle. NCPS releases the clamp upon payment of a fee. Prominent signs advise motorists entering the property that if they park in breach of the parking rules their vehicle may be clamped (e.g. “Unauthorised or illegally parked vehicles will be CLAMPED”), the clamp being removed only upon payment of a “ clamp release fee” of a specified amount. Revenue place some reliance on this characterisation of the fee by NCPS. Motorists are also advised that their vehicles may be towed, with a further (and higher) fee charged for its return. In practice, according to the evidence of the Managing Director of NCPS, Mr. Ballard, towing away is “ very rare” and clamping is the principal method of enforcement. It appears from the material provided to the Commissioner (which forms part of the Case Stated) that clamping release fees are frequently retained in full by NCPS, though in at least one of the contracts discussed there was a revenue-splitting arrangement which involved division of all income, including the revenue generated from clamping. 1

11 . The public has access to some of the car parks – such as those at shopping centres or train stations — managed by NCPS. At these locations, motorists may be required to...