NHS wins car parking battle with HMRC

It could mean NHS trusts are able to reclaim around £70m from His Majesty’s Revenue and Customs in incorrectly levied tax charges, and suggests they could potentially lower their parking charges, if they chose to do so.

The Court of Appeal ruled against HMRC in a case brought by Northumbria Healthcare Foundation Trust.

Around 50 similar cases were linked to the Northumbria case, with the total at stake thought to be roughly £70m.

The North East provider had brought an initial case back in 2017, insisting the trust was not a taxable body under existing law.

A first-tier tribunal disagreed and said not imposing VAT would give hospitals an unfair advantage over private-sector car park operators. A further appeal by the trust was unsuccessful.

However, the Court of Appeal has now effectively overturned this ruling, finding that trusts are public authorities whose activities should be subject to different rules. Judges also rejected a claim that not levying VAT would give trusts a commercial advantage.

It is unclear whether HMRC will appeal to the Supreme Court.

Scott Harwood, a tax expert at RSM who has followed the case, said: “The Court of Appeal determined that NHS-run ‘pay and display’ hospital parking is not subject to the same rules as private parking operators, which is surely obvious, given the government often gives the NHS diktats as to its operation.

“It’s also clear that the NHS is not in the same market as commercial providers, as it aims to ensure parking is kept available for those using the hospital facilities. Fees charged act as a disincentive to those who might otherwise abuse free parking. The NHS is not in the business of operating public-usage car parks.”

He added: “If this case is ultimately successful then NHS bodies might be tempted to maintain pricing at their current levels and retain the benefit; whereas others may see this as an opportunity to pass savings on.”

An HMRC spokesman said: “The tax rules apply to everyone and we discharge our responsibility across all sectors fairly and evenly. We are considering the judgement.”

A Northumbria Healthcare FT spokesman said: “We welcome this decision and will now assess the implications of the ruling.”