A car parking management company is liable for €1.7 million VAT on fees collected for its de-clamping service, the Court of Appeal has ruled.

Nationwide Controlled Parking Systems (NCPS) had appealed against a High Court decision that a Tax Appeals Commissioner erred in finding that VAT was not chargeable on the de-clamping fee.

NCPS provides parking control for places like apartment complexes, churches, schools and hospitals.

In 2014, it appealed the refusal by Revenue to repay a claim of €1.77 million for VAT paid on clamping release fees between November and December 2009, and between September and October 2013 to a Tax Appeal Commissioner.

Revenue had refused the repayment on the basis the fees were subject to VAT under EU and Irish tax law. The Appeals Commissioner, who is independent of Revenue, found NCPS was entitled to repayment of the VAT.

Point of law

Revenue then brought a High Court appeal on a point of law. The High Court found the Commissioner was incorrect in law. NCPS appealed, urging the Court of Appeal to overturn the High Court decision. The Revenue opposed the appeal.

The three-judge Court of Appeal, in a judgment published on Wednesday, rejected the appeal.

It said the centrepiece of the NCPS argument as to why the clamping fees 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. The Tax Appeal Commissioner erred in accepting this argument, the court said.

The correct legal characterisation of the transaction for de-clamping was that of “a service provided to the car owner” and that fee was properly regarded as subject to VAT, it said. The appeal should therefore be dismissed, it said.