A RARE defeat for the taxman over VAT could be worth thousands to Malvern Hills Conservators and Malvern Hills District Council.

In a landmark decision last week, a Government tribunal said the Isle of Wight Council did not have to pay VAT on the money it makes from parking charges.

The ruling has big implications locally. The Conservators currently takes about £137,000 a year in parking fees and has to pay about £24,000 in VAT.

In December 2004, the Conservators put its own request in to Customs and Excise, which collects VAT, to have its car parking fees exempt, backdated to 2001.

No decision has yet been taken but following the Isle of Wight ruling, the Conservators has written to Customs asking for action.

"There are still hurdles to overcome," said Cheryl Gentry, the Conservators' financial consultant.

She said there was no certainty the Conservators could recover VAT going back to 2001 and refused to speculate on what sums it could recover.

Conservators' director Ian Rowat said a decision on what to do with any recovered cash will be up to the board.

"Hopefully, we will use it in positive actions. We've got some ambitious projects in our forward strategy and as a charity we could plough it back into our work."

Malvern Hills District Council finance director Peter Gillett said: "We intend to pursue this. Anything we can do to bring in more revenue is welcome. We're aware of the various test cases and we've been keeping a watching brief on them."

He said the council takes about £150,000 a year from car parking. The VAT on this is £26,250.