Supreme Court puts brakes on NHS car parking dispute
The Supreme Court has handed down its judgment in the case of Northumbria Healthcare NHS Foundation Trust v HMRC [2025] UKSC 37. This case addressed whether the Trust’s hospital ‘pay and display’ car parking services were supplied under a ‘special legal regime’, and if treating the activity as outside the scope of VAT would cause significant distortions of competition.
The provision of hospital parking is not a statutory undertaking for the NHS, though it is subject to government mandated controls. The Court of Appeal had decided the Trust was acting as a public authority, ie subject to different legal conditions compared to private operators, due to the guidance combined with more general public law obligations. However, the Supreme Court overruled this analysis stating there was insufficient legal certainty where such activities were only controlled via guidance.
With respect to whether the activity significantly distorted competition, the Supreme Court ruled it did. It drew heavily on the analysis of a earlier car parking case involving the Isle of Wight council, which concluded that the non-taxation of local authority parking facilities would be distortive. Very little emphasis was given to how the NHS uses charging to manage use of their facilities for the benefit of patients, and more weight was given to the distortive effect of non-taxation itself.
So HMRC's appeal was allowed, confirming the Trust should charge VAT on car parking.
Many NHS Trusts have rebate claims standing behind the Northumbria case and will now need to repay HMRC if they asked for their claims to be paid out following last year’s Court of Appeal judgment. It is unfortunate for the NHS that the litigation has ended in this way, with part of the parking funds previously used to subsidise healthcare now due back to HMRC.