“NHS sites that are close to city/town centres may need to ensure their car-parking charges are not lower than local car-parks otherwise commuters and visitors may be tempted to use their car-parks instead. It may be necessary to increase charges if this is occurring.”
“Advice to the NHS on the factors to consider when operating car parking schemes on their premises under income generation rules, including what kind of car parking scheme to offer, what charges to impose and what concessions to consider.”
“Car parking on healthcare sites should only be considered as part of a wider travel plan which the NHS body should have in place … assuming it is decided that car parking should be offered on healthcare sites as part of this travel plan”
“1. States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions. However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition. In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible. 2. Member States may regard activities, exempt under Articles 132, 135, 136, 371, 374 to 377, and Article 378(2), Article 379(2), or Articles 380 to 390, engaged in by bodies governed by public law as activities in which those bodies engage as public authorities.”
“41A. Supply of goods or services by public bodies (1) This section applies where goods or services are supplied by a body mentioned in Article 13(1) of the VAT Directive (status of public bodies as taxable persons) in the course of activities or transactions in which it is engaged as a public authority. (2) If the supply is in respect of an activity listed in Annex I to the VAT Directive (activities in respect of which public bodies are to be taxable persons), it is to be treated for the purposes of this Act as a supply in the course or furtherance of a business unless it is on such a small scale as to be negligible. (3) If the supply is not in respect of such an activity, it is to be treated for the purposes of this Act as a supply in the course or furtherance of a business if (and only if) not charging VAT on the supply would lead to a significant distortion of competition. (4) In this section ‘the VAT Directive’ means Council Directive 2006/112/EC on the common system of value added tax.”
“[Counsel for the Trust] could not point to any statutory or contractual provision that stated that the Trust must provide parking or provide it in a particular way. Unlike in Carpaneto Piacentino, the Trust does not have any public powers to authorise or restrict parking on a public highway but instead relies on contractual agreement with those who wish to park their cars on the Trust’s own land. Such an activity is a matter of private law and not public law. I accept that the Trust must have regard to guidance issued by the NHS and Department of Health but the guidance is just that: it is not a special legal regime. The fact that the Trust is required by its contract with the Clinical Commissioning Groups and the guidance to take certain matters, eg reasonable cost and local travel plans in the area, into account that private operators are not required to consider does not elevate guidance into a public law regime.”
“Further, on the basis of my findings of fact, I conclude that treating the Trust as a non-taxable person would lead to actual or potential distortions of competition which are more than negligible. This is shown by the fact that the HTM identified a need for bodies such as the Trust (which followed the HTM and other guidance) to ensure that their car-parking charges are the same as or higher than those charged in local car parks to discourage commuters and visitors from using the hospital and health centre car parks instead. The implication of the HTM is that lower charges (as might occur if the VAT element ceased to be chargeable) would lead to more people choosing to park in the Trust’s car parks. A similar conclusion can be drawn from the extract from the Car Parking Best Practice quoted at [20] above and the fact that that one of the Trust’s sites was used as parking for the local airport until the Trust increased its charges … It is, to my mind, obvious that if the Trust is not required to charge and account for VAT, it could undercut commercial car park operators by providing parking more cheaply. Whether the Trust chose to reduce its charges to patients and NHS staff by an amount equal to the VAT which was no longer chargeable or simply pocketed the additional income is nothing to the point. In both cases, there would be distortion of competition because either the cost of parking would be cheaper or the profit derived from it would be higher than in the case of parking provided by private operators. The amount of the potential difference in pricing or profit between parking provided by the Trust and that provided by commercial operators were VAT to cease to be chargeable by the Trust cannot, in my view, be described as negligible.”
“15. An analysis of the first subparagraph of Article 4(5) in the light of the scheme of the directive shows that it is the way in which the activities are carried out that determines the scope of the treatment of public bodies as non-taxable persons. In so far as that provision makes such treatment of bodies governed by public law conditional upon their acting ‘as public authorities’, it excludes therefrom activities engaged in by them not as bodies governed by public law but as persons subject to private law. Consequently, the only criterion making it possible to distinguish with certainty between those two categories of activity is the legal regime applicable under national law. 16. It follows that the bodies governed by public law referred to in the first subparagraph of Article 4(5) of the Sixth Directive engage in activities ‘as public authorities’ within the meaning of that provision when they do so under the special legal regime applicable to them. On the other hand, when they act under the same legal conditions as those that apply to private traders, they cannot be regarded as acting ‘as public authorities’. It is for the national court to classify the activity at issue in the light of that criterion.”
“21. The national court must, in accordance with the case-law referred to in paragraphs 16 and 17 above, analyse all the conditions laid down by national law for the pursuit of the activity at issue in the main proceedings, to determine whether that activity is being engaged in under a special legal regime applicable to bodies governed by public law or under the same legal conditions as those that apply to private economic operators. 22. The fact that the pursuit of an activity such as that at issue in the main proceedings involves the use of public powers, such as authorising or restricting parking on a public highway or penalising by a fine the exceeding of the authorised parking time, shows that this activity is subject to a public law regime. 23. In view of the nature of the analysis to be carried out, however, as the Court has already held, it is for the national court to classify the activities at issue in the light of the criterion adopted by the Court (Joined Cases 231/87 and 129/88 Comune di Carpaneto Piacentino, paragraph 16, andCase C-4/89 Comune di Carpaneto Piacentino, paragraph 11). 24. The answer to the first question must therefore be that the letting of spaces for the parking of vehicles is an activity which, where it is carried on by a body governed by public law, is carried on by that body as a public authority within the meaning of the first subparagraph of Article 4(5) of the Sixth Directive if it is carried on under a special legal regime applicable to bodies governed by public law. That is the case where the pursuit of the activity involves the use of public powers.”
“That conclusion is not affected by Ireland’s argument that, in so far as they engage in economic activities, local authorities in Ireland do so uniquely pursuant to powers conferred upon them under the specific legal regime applicable to them by statute. … [I]t is to be noted that bodies governed by public law act as public authorities when they engage in activities which, while fully economic in nature, are closely linked to the exercise of rights and powers of public authority (Isle of Wight Council and Others, paragraph 31). Moreover, the mere fact that a body governed by public law acts within the framework of a special legal regime and in accordance with powers conferred upon it by statute does not mean that engaging in its activities necessarily involves the exercise of rights and powers of public authority.”
“It is not enough therefore for the local authority to demonstrate that in relation to the transaction in question it acted as a local authority. That would be the case in respect of all its activities. As a statutory body a local authority cannot act in any other capacity. The determining factor seems to be whether the transaction itself is governed by the ordinary rules of private law or whether it takes effect under what the Court described as a special legal regime applicable to local authorities. This would mean that the letting of commercial premises owned by a local authority would (apart from being an exempt supply) not fall within Article 4(5) because the transaction would be governed by the same legal rules and principles as a letting by a private landlord. By contrast the provision of secure residential accommodation under theHousing Act 1985 would qualify in that the terms of the letting are applicable only to transactions involving local authorities with their particular statutory responsibilities in that field.”
“… In our judgment the legal regime in question is special. It is special to the colleges which provide the courses in question. If there were private traders, which there are not in Scotland, who provided such courses they would not do so under that legal regime. Another way of putting matters perhaps is that once it is accepted that the College is a public authority, it is clear that in providing the funded courses, having regard to the provisions of the statutory framework, it does so as an act of public administration and not as an act governed solely by the rules of private law.”
“While our system of law does not always, and for all purposes, recognise a strict dichotomy between public and private law, we have no difficulty in reaching the view that, having regard to the jurisprudence of the European Court of Justice, the activity of the College in question would be regarded as being governed to a significant extent under that jurisprudence by public, as opposed to private, law.”
“41. … I do not need to decide whether the existence of purely theoretical or potential competition is sufficient to establish the existence of a market for this purpose as it is clear on the evidence that there was actual competition. The Car Parking Best Practice states explicitly in paragraph 24 that car parking on NHS sites is in competition with alternative car parking facilities. Paragraph 3.5 of the HTM warns NHS bodies that sites close to city/town centres may be used by persons not attending the healthcare facility, eg commuters and visitors to the area, if the car parking charges are lower than local car parks. This shows that the market for car parking includes both the Trust’s car parks and other car parks or parking areas in or near the Trust’s hospitals and health centres. Further, until it changed its charges, one of the Trust’s sites was used by persons traveling from the local airport and thus was in competition with airport parking.”
“61. We agree with Mr Vajda that the way in which the Court dealt with potential competition in the present case makes it likely that the Court did take it for granted that differential tax treatment would distort competition in the off-street car parking market; differential tax treatment of similar offerings generally does distort competition, as the Court observed at paragraph 35 of Rank. The fact that we have been driven to conclude as a matter of fact that differential tax treatment would distort competition in the off-street car parking market, despite the particular features of the market urged upon us by Mr Ghosh, gives us a considerable degree of confidence in the suggestion that differential tax treatment of similar offerings will distort competition in any market. But if that is correct, it is a proposition of fact. We agree with Mr Ghosh that what Mr Vajda is contending for amounts to a presumption of law. We also find it salutary to remember that the presumption will only make a difference in a case in which distortion of competition cannot be established. Like Rimer LJ and the members who gave the interlocutory decision of this Tribunal, we are all unpersuaded that it is possible to spell out of the ECJ’s judgment a proposition of law that differential tax treatment of competing suppliers amounts to distortion of competition without more.”
“72. There was no discussion before us specifically of the meaning of the expression ‘distortion of competition’; we do not consider that any was required. Mr Ghosh’s formulation of the two alternative negative propositions that, if accepted, would bring his clients success … implicitly accepts that there would be distortion of competition if (1) a situation of non-taxation would lead Local Authorities to behave differently on the market from the manner in which they would behave in circumstances of taxation and (2) the commercial position of private operators of car parks would be affected as a result. We consider that that is correct. … 74. Mr Vajda submitted, however, in connection with his submission that distortion of competition was to be presumed, that the exercise that the Court of Justice had entrusted to us involved looking at the issues with a high degree of abstraction; he pointed out that we are a tax tribunal and not the Competition Commission and that the test which the ECJ judgment required national courts and tribunals to apply was one designed for tax tribunals and not competition authorities. Though we have rejected his submission that distortion of competition is to be presumed, we find those points to be well made. We add that we do not have either the resources or the information-gathering powers of the Competition Commission and that the question that we are required to answer is more difficult to answer with precision than the questions faced by the Competition Commission. The Commission is required to reach conclusions about circumstances in actual markets that can be investigated; in a merger case it is also faced with the more difficult task of predicting the consequences of a future event (namely the proposed merger). We have to answer the even more abstract question, not of the consequences of an event, but of the consequences of a different order of reality. 75. On the basis of the various considerations discussed in this section of our Decision, we consider that the question that article 4(5)(2) requires us to answer is whether, in the event that Local Authority off-street car parking were not taxable, there would be in the United Kingdom as a whole a degree of distortion of competition that could not be dismissed as negligible. In doing so we are simply to compare a situation in which the activity is non-taxable with the situation in which it is taxable. The question is in our view a question of fact; it is, however, a question of secondary or inferential fact to be judged on the basis of conclusions of primary fact.”
“9. … Although the FTT accepted … that it was ‘likely that the court did take it for granted that differential tax treatment would distort competition in the off-street car parking market’, it rejected again, and consistently with what Rimer LJ said when remitting the case for rehearing, the argument that what the court said gave rise to a presumption of law. Rather, it considered that any presumption there might be would be a presumption of fact; and it is a clear inference that the FTT took the view that if there should be such a presumption, it was rebuttable. Indeed, there would have been no purpose to its examination of the extensive evidence before it had it thought otherwise. HMRC have not renewed their earlier argument before us, and we are content to proceed from the assumption that the FTT’s analysis is correct.”
“63. The principal focus of Mr Ghosh’s submission was inevitably and correctly on the findings of the FTT since the critical issue is whether the FTT made an error of law in the light of its legitimate findings of fact … 64. At the heart of the FTT’s decision was the conclusion that, in a hypothetical world in which VAT had never been imposed on OSCP [off-street car parking] charges, those charges would have been lower. That conclusion was based on two principal matters. 65. The first was that, in fixing the level of charges, local authorities are bound to have regard to the need to meet costs. The second was that, if VAT had never been payable on OSCP charges, local authorities would have been able to, and would have wished to, keep charges lower in order to boost the local economy by attracting shoppers with cars while maintaining the same spending priorities and the same allocation of the general fund as between the different activities financed out of the general fund.”
“76. I would, therefore, dismiss this appeal since the appellants have not contended that, if the FTT was entitled to reach its conclusion on pricing, it was not also entitled to conclude that the non-taxation would lead to significant distortion of competition within Article 4.5(2). It is plain that if one supplier in the market for OSCP is able to have lower prices over time because of its special tax status that is likely significantly to distort competition.”
“… bodies governed by public law are treated as taxable persons in respect of activities in which they engage as public authorities where those activities may also be engaged in, in competition with them, by private individuals, in cases in which the treatment of those bodies as non-taxable persons could lead to significant distortions of competition, but they are not obliged to transpose that criterion literally into their national law or to lay down precise quantitative limits for such treatment.”
“As follows from the wording of the second subparagraph of Article 13(1) of the VAT Directive and from the case-law on that provision, its application presupposes, first, that the activity in question is carried on in competition, actual or potential, with that carried on by private operators and, secondly, that the different treatment of those activities for VAT purposes leads to significant distortions of competition, which must be assessed having regard to economic circumstances.”
“64. We consider that Isle of Wight and Rank show that whether there is distortion of competition must be determined by reference to the nature of the activity and without regard to the particular market in which it is supplied. It is not necessary to show that there is actual competition between the two activities provided that the potential competition is a real and not purely hypothetical possibility. If the two activities are identical or similar from the point of view of the consumer and meet the same needs of the consumer then they are in competition with each other. If, further, the two activities are treated differently for the purposes of VAT then, as a general rule, that will be regarded as giving rise to a distortion of competition.”