TOLL charges for Whitchurch Bridge could increase sooner that expected if the owners are forced to pay VAT on its reconstruction.
The Whitchurch Bridge Company claims that it should be exempt from paying a £700,000 tax demand under a 220-year-old Act of Parliament.
It warns that if the company loses its case in the High Court then the toll increases could come up to two years earlier than planned.
The Grade II-listed bridge, which carries 6,000 vehicles a day, is due to be rebuilt at a cost of about £3.8 million. The work is scheduled to begin next October and be completed by May 2014.
On Thursday last week, the company went to the High Court to argue that it enjoyed “perpetual immunity from taxation” under the Act, which was passed when the bridge was built in 1792 by 10 local dignitaries.
It pointed out that clause 42(1) of the Act states: “The said bridge, or the tolls thereof, shall not be rated or assessed for, or towards, any public or parish rate, tax, or duty whatsoever.”
The Act was updated in 1988 for obsolete clauses to be removed but this clause remained.
Geoff Weir, company secretary, said: “The Act makes it perfectly clear our tolls are exempt for perpetuity and we think this should include the bridge reconstruction as well. That’s what Parliament intended.”
Lawyers for the Treasury argued that the company should not be exempt because the VAT refund scheme was for organisations directly funded by state grants or whose costs were centrally funded.
They said that if the company was exempt from all forms of taxation, this would also include National Insurance contributions and PAYE for employees, vehicle excise duty and other levies.
The judge, Mr Justice Burnett, reserved his judgment and will write to the company and the Treasury within a month informing them of his interpretation of the law. At present, the bridge toll is 40p or 20p for bridge card holders and in May, the company decided against imposing a 50 per cent increase for the next two years.
Mr Weir said that if the company lost its case, he would reconsider imposing the increase sooner.
“If the judge supports our view it will be very good news for the company and for the people who cross the bridge,” he said. “If we have to pay the £700,000 VAT then that’s the equivalent to the tolls we collect in 20 months. The next toll increase would then have to come sooner.
“Until we know how much it will cost to reconstruct the bridge, we won’t know how much money we have. This means we won’t know when the increases would come in or what work can be done to the footpath approaching the bridge.
“However it works, if we can make sure we don’t have to pay the VAT, we will be in a better position financially, which means people pay less in tolls. Win or lose, we thought it was worth fighting the case.”
Harry Butterworth, chairman of Whitchurch Parish Council, claimed toll revenue was already falling.
He said: “As cars are getting bigger, the bridge approaches are too narrow to carry the volume safely and consequently there has been a steady fall in numbers. That is without the discouragement of a significant toll hike.”