NCP has been making almost £700,000 a year from motorists who do not have the correct change, a court heard.
The car park firm kept more than £2million from drivers between 2009 and 2012, which it received in overpayments where its ticket machines did not give change.
The figure was revealed in a High Court case where the company was fighting to prevent the taxman taking 20 per cent of the cash in VAT.
Last night NCP was accused of ‘fleecing’ motorists and told it should give the overpayments to a good cause.
The car park firm kept more than £2million from drivers between 2009 and 2012, which it received in overpayments where its ticket machines did not give change
Lawyers for NCP, the biggest car park operator in the UK with 600 sites, argued it should not have to pay VAT on overpayments because it was not providing a service in return for the cash. VAT is normally levied on transactions where a service is provided.
The company was attempting to recoup £490,000 which has already been taken by the taxman. NCP took its case to the High Court after losing a tax tribunal case last year.
But Lord Justice Newey, ruling on the case with Lord Justice Patten and Lord Justice Males, dismissed NCP’s appeal – leaving the company with a legal bill running into tens of thousands of pounds. The judge said the total sum handed over by the customer, including any overpayment, should be deemed the fee they have paid to pay to park – meaning all the money was liable for VAT.
‘This appeal concerns a situation familiar to motorists,’ he said. Citing the example of a driver paying for an hour’s parking at £1.40 with a pound coin and 50p piece, Lord Justice Newey added: ‘I consider that if a customer pays £1.50, that amount is the value given by the customer and received by the supplier in return for the right to park.’
HMRC had taken £488,669 in VAT from NCP for overpayments covering the period between June 2009 and December 2012. The sum equates to a 20 per cent share of £2.44million – more than £681,000 a year – made in overpayments to NCP over that time.
Edmund King, AA president, said: ‘The best way out of this would be to give motorists change in the first place’
The firm says it only pursued legal action because of a case in which a council won VAT exemption for such overpayments. However, in this case it was ruled that a council’s fees are set in law so overpayment was not altering the amount paid for the ‘service’ of parking.
NCP – which operates its own multi-storey sites and also manages car parks for councils and other landowners – made an operating profit of £10.3million in 2016, on a turnover of £202million.
Edmund King, AA president, said: ‘The best way out of this would be to give motorists change in the first place.
‘Drivers who have wanted to give left-over parking time to another motorist but been prevented by measures to stop tickets being transferred will have a wry smile on their face when they hear this court ruling.’
RAC spokesman Pete Williams said: ‘Everyone who has been unlucky enough to be fleeced in such a way by a car park operator will view this appeal with utter contempt.’ He said car parks should all offer the option of card payment.
NCP said it would not comment.