VAT online filing ‘discriminatory’: tribunal

Monday 7 October 2013

Three appellants have reportedly won their appeal against HMRC’s requirement for VAT returns to be submitted online.

According to the Low Incomes Tax Reform Group (LITRG), which supported the appellants, the judge at the tribunal agreed that regulations insisting that VAT returns must be submitted online were discriminatory against those who were unable to do so, such as older or disabled people and those for whom internet access is difficult.

LITRG says that two of the appellants experienced a disability which meant that it was either difficult or impossible for them to operate a computer, while the other lived in an isolated area where broadband access could be very limited. All of the appellants, who owned their own small businesses, were also at an older age where it would have been especially hard for them to use a computer and overall, each would have had to pay to instruct an agent to submit their return on their behalf. All three appellants had submitted paper returns without any problems in previous financial years.

At the tribunal, the judge said because the regulations required online filing without making any provision for those who were older, disabled or who lived in remote areas, they were actually violating the human rights of the appellants and therefore illegal under legislation set out by the EU. Anthony Thomas, LITRG chairman, says that the appeal outcome has plenty of implications for tax administration in the UK.

“We now know that digital mandation is a policy that contravenes the rule of law when it fails to make provision for the needs of older or disabled people or those who cannot access broadband easily because of where they live,” he explains.

“This case shows that HMRC must consider the needs of taxpayers when making regulations about complying with VAT and other tax requirements. They cannot just act in isolation without regard for the human rights of taxpayers and to other provisions of the general law of the land.”

LITRG is an initiative of the Chartered Institute of Taxation intended to speak on behalf of taxpayers who are not in a position to be able to afford professional advice. But it could be that this ruling establishes a principle that has a bearing on contractors and freelancers from a number of different walks of life.

Mr Thomas says that any assistance the tax authority can offer taxpayers when it comes to compliance needs to respond to the wide range of needs reported across the full variety of individuals in the UK.

He added that LITRG is ready and willing to work with HMRC to make sure that taxpayers who are unable to use online channels to send in tax returns on grounds such as age or disability can still receive appropriate and legal treatment. However, he pointed out that this has to include providing alternatives such as paper filing so that those who own their own companies can comply with their obligations in a manner which fits their particular needs.


By Victoria McDonnell

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