Parking fines

There is a history of disputes between taxpayers and HM Revenue & Customs concerning the VAT treatment of fines payable by motorists who overstay their allotted car parking time or do not park properly.

The question is whether the fines are punitive damages for breach of contract, or whether they are a surcharge under the terms of the contract. In a recent tribunal case of Vehicle Control Services Ltd (TC00999) HMRC persuaded the tribunal that the company collecting the ‘fines’ was carrying out a transaction that was part and parcel of the contract it had with the motorist.