The Court of Appeal has overturned the decisions of the First-tier Tribunal and Upper Tribunal in Vehicle Control Services Limited v HMRC [2013] EWCA Civ 186.

The case concerned the VAT treatment of “fines” imposed by Vehicle Control Services Limited (VCS) on motorists who contravened the rules laid down by VCS in relation to parking in car parks where the landlord had appointed VCS to control parking on the land.

In essence, the Court of Appeal found that there was a contract between VCS and motorists who parked their cars and hence, where motorists breached the terms and conditions imposed on them under the agreement (eg by parking in the wrong place), there was a breach of that contract capable of giving rise to damages. It followed that VCS were not liable to account for VAT on the ‘fines’ imposed on motorists who contravened the rules set out by VCS.