The high court sided with HMRC as NHS hospitals were liable for VAT on parking charges

Wednesday 29 October 2025 12:09

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HMRC took a case against the hospital arm of the NHS to the Supreme Court over whether VAT should be charged on hospital car parking charges, and they were successful.

Today marks the end of a five-year legal battle through every stage of the court over VAT on parking tickets used by patients, visitors and hospital staff at Northumbria Healthcare NHS Foundation Trust’s 14 hospitals.

The NHS Trust provides pay and display car parking at its hospitals, including North Tyneside General Hospital and Northumbria Specialist Urgent Care Hospital, and accounts for VAT at the standard rate (20 per cent) on the parking charges it charges.

Parking costs vary, but are listed as ranging from £2 per hour to £6 for a 24 hour stay.

In 2017, the Trust submitted a claim to HMRC for a VAT refund (total £267,443.92), but HMRC considered that VAT was chargeable on the car parking equipment and rejected the claim.

VAT appeal rejected

According to the tax code, VAT is charged on the supply of goods and services. However, there is an exception when a public body provides a service if the body is ‘acting as a public authority’. If there is an exception, then the public body is not treated as a Taxable Entrepreneur and does not collect VAT on the delivery of the goods or services in question.

The NHS Trust appealed to the Court of First Tier, but its appeal was rejected. He then appealed to the High Court, which also rejected his appeal.

The case was then taken by the NHS Trust to the Court of Appeal, which last year allowed the NHS Trust’s appeal on all grounds, setting aside both Tribunal decisions, and allowing the Trust to reclaim its VAT from the tax authorities.

HMRC switched places and became the appellant, taking the case to the Supreme Court.

However, unanimously, the Lord Justices found that the NHS Trust had failed to prove that it was “acting as a public authority” under the Special Legal Regime.

As a result, the high court allowed HMRC’s appeal against the Court of Appeal’s findings, ending VAT recovery of £267,443.92 from the NHS Trust.