The European Court of Justice has ruled in the case of Purple Parking that a company supplying parking facilities and mini bus transfer to the airport terminal is making a single standard-rated supply of parking services and not separate supplies of parking and transport services.
In Purple Parking Ltd & Airparks Services Ltd v HMRC (C-117/11), the taxpayer operated off-airport parking and park-and-ride services, as a number of the car parks were a significant distance away from the airport itself. Customers delivered their car to the car park, then took a regular shuttle bus from the car park to the airport, leaving their car to be parked by a parking operator. Customers returned to the car park on the same bus to retrieve their car.
Under UK legislation, the provision of parking is subject to the standard rate of VAT, while passenger transport is generally zero-rated, but there is a specific carve-out for transfers from airport car parks to the terminal by the parking operator. Where the transfer is supplied by a third party unconnected with the parking operator, the transfer is zero-rated. The taxpayer claimed that it was making separate supplies of parking and transport and that the exclusion from zero-rating for transport by parking operators breached the principle of fiscal neutrality.
CJEU reasoned opinion
In a "reasoned opinion" rather than a decision, the Court focused on the intention of the customer: although the majority of the costs incurred by the operator were incurred in providing the transport, rather than the parking, what the customer wanted was a secure parking facility. In addition, the price was based on the length of time for which the customer parked his car, rather than the number of passengers in the minibus. The transport was a necessary element of the supply because the car parks were so far away; that in itself was what enabled the operators to offer such a low price.
In view of the ruling that there was a single supply of parking, the Court declined to consider whether the UK law on airport parking breached the principle of fiscal neutrality.