Court rules VAT online filing discriminatory | AccountingWEB

Court rules VAT online filing discriminatory

Three appellants supported by the Low Income Tax Reform Group (LITRG) have won their appeal against HMRC’s requirement that they file their VAT returns online.

First tier tribunal judge Barbara Mosedale held that the regulations which required online filing of VAT returns without providing exemptions for older people, those with disabilities or who lived in parts of the country which were too remote, were in breach of the appellants’ human rights and were unlawful under the EU law.

All three ran their own small businesses, two of which experienced disabilities which made it excessively difficult or impossible for them to use a computer, while a third lived in a remote area of the country where broadband access was absent or unreliable.

All three were of an age which made learning how to use a computer particularly difficult and they would have had to incur the cost of instructing an agent.

They had also all filed their VAT returns promptly and accurately on paper for many years.

Anthony Thomas, chairman of the LITRG, said...


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Online filing discrimination    10 thanks

barbara whale | | Permalink

I am pleased with the result but have fears for those of us that are computer literate now that the aging process will affect our ability to deal with the juggernaut that will always be controlled by a younger element of society.

Don't get me wrong I am all for progress and love the challenges it brings; being a working OAP, a computer user each and every day, a user of internet banking, iPod and iPad, Facebook etc I am more than qualified to understand both sides of the argument.

Pensioners have always been at the forgotten end of the system and they will be even more so when their arthritic fingers can't hit the correct keys and they fail to complete the online task in the allotted time span set by some bright young person.  I do however take great satisfaction in knowing that one day these bright young people will be old and arthritic and moan about some other juggernaut that has stamped on their way of life.

Good to see this includes    7 thanks

DavidT5000 | | Permalink

Good to see this includes those in remote areas. I wonder how "remote" you have to be to be "too remote"?

Certainly in geographical terms huge areas of the UK has a barely useable internet service. It about time those insisting on "digital by default" were made to think a bit. It was never fair to make these things online only where the infrastructure currently does not exist. Get the infrastructure in place first and then change the rules, not the other way around.  


paper returns    4 thanks

David Gordon FCCA | | Permalink


 It is not just those of us who are the age of quality brandy.

 It is the unjustifed HMRC decision that everyone taxpayer must be computer literate.

 Including the blind and the dyslexic.

 A  survey (USA) quoted in the New Scientist- opined that statistically speaking the maximum percentage of the (working) population able to access and to use computers would not exceed 80%.

 Tens of thousands of our clients have no demonstrable economic business adminstrative need for computers. The cost of which often represents and takes a significant part of their  net income. Worse, the time cost for these personal businesses is enormous.

 If the persons concerned what statements of supporting evidence, for the court, in this matter, they have only to ask.


Will this extend to RTI

Malcolm071159 | | Permalink

I wonder if this ruling will be extended to include such matters as filing under RTI which is "compulsary" at present. At least under self-assessment people have the choice to file paper returns albeit they have to be filed at an earlier date to those filed online.

Online Vat    3 thanks

msmall | | Permalink

Surprised HMRC did not see that one coming and just accept the occasional paper copy

Bright not so young person from the digital maker world :)    2 thanks

Espharess | | Permalink

We have not forgotten you nor our to be older selves, we see our grandparents and parents getting older and know it will be our turn one day! Hence we are working on hand movement swipe technology and automating our homes so that when it's our turn we will be able to voice command our homes to do the things we might struggle with. This takes time to invent and change in habit takes even longer, change is the barrier here, not the break neck speed of technological advancements.  If you don't see a need for something you will not engage, simple human nature and our older generation simply don't see the same value in IT as the younger ones do, simple case of history repeating itself, the new is always perceived as a mild to severe nuisance by those who don't like change.

I wonder how the first group of people must have felt when the wheel was invented, I'm 110% sure a proportion of people refused to get on that cart and said "I would rather walk"

I feel for those 3 people and all those out there struggling with adopting the use of technology, good for them standing up for their view points :) if they want to do this at a slower pace then its their time to use, just that when it impacts on others such as HMRC having now to accept paper base returns, who is going to pay for that extra person?

Equal ops    2 thanks

Paulsoper | | Permalink

Governments have legislated for and follow the principles of equal opportunities - great care is supposed to be taken in ensuring that government policy if fair for all or, if it isn't, simply adapts it for those who may be disadvantaged or makes adequate provision.  Mandatory on-line filing was always bound to give rise to these problems.  Certain groups do have adaptations made for them - those who have religious principles which forbid computer use, for example.

But all it really needs is a recognition that a one size fits all solution will never suit everyone. You need to allow for an exception by providing a route through which, on appeal, a person can make a valid case to be allowed to continue to make paper filings and, if accepted, avoids this crazy situation.  Once again, I'm afraid, a government process which concentrates on the problem, by penalty, rather than the solution.

Common Sense

Ian McTernan CTA | | Permalink

Good to see a judgement for common sense for once.

Rural broadband is a complete mess- as some money was thrown at it, but not enough, and then a huge set of rules, resulting in a bureaucrats dream and a nightmare for those that actually want it.  Perhaps if they had spent a tiny proportion of the billions spent on the NHS computer records system (has it past £13bn yet?), or better yet cancel HS2 and just upgrade existing tracks, straighten them where necessary, and use the 10-20bn saved to ensure that 99.99% of the population can access superfast broadband.

I have many clients that can happily use their mobile phone to make calls, even download apps- but would be clueless when it comes to online filing and have no intention of ever learning.

The paper forms are designed to be scanned in anyway, so it really should not be a problem.

A very simple opt out from the start would have saved all the money spent on this case for a start and no doubt the millions of queries filing online creates- which would pay for the few staff needed to ensure the paper forms get scanned in.

Let's hope other decisions follow on from this one.

And a big well done to the LITRG!!


see it coming    2 thanks

kenatnam | | Permalink

HMRC are famous for their arrogance and lack of understanding of the real world - the people who pay their wages, so no they wouldn't see it coming because they live in a world where everything they need magically appears, desk, heat, computer, salary, pension, lack of accountability, and most of all they see it as their misguided duty to wring every last drop of tax out of us by any means possible - even if it means that taxpayers give up work because of the administrative burden.

Which other business can you think of which would be so incompetant as to require 2 different reference numbers (PAYE) from a client and then to have to be told which of 2 offices they paid to?? Or, because a small proportion of people don't have an NI number then to require everyone to have a UTR number - instead of just giving the non NI holders a UTR number? The extra administrative burden is horrendous.


Arrogance - if we ring HMRC we have to jump through several hoops but if they ring us they are very surprised that we require the same identity questions answered.


Seen it coming - couldn't see the end of the world coming



trecar's picture

It's not all about internet access

trecar | | Permalink

As one who has suffered systems failures from defective software updates I can assure both HMRC and internet freaks that lack of knowledge, ability or broadband is not the only reason for failing to file online. It is not so long ago that McAfee, a virus software protection company, issued an update that blocked access to the internet, Their solution was send out an email with a fix. But of course if your internet access was blocked you would not have access to the email and be able to download the subsequent fix. And of course, many is the time that Microsoft have screwed up on the update front and caused software failure or degradation, both with ordinary programs and operating software. I have lost count of the number of times that my problems have been caused by software updates, with Microsoft being the worst offender. So to assume that the solution lies in the hands of the filer is both naive and irrational. Is it any coincidence that HMRC have not switched to email as the general route for agents and taxpayers to communicate? I wonder why? They presumably have a problem over security or operator resilience. If they have problems what on earth makes them think that others don't?

on line filing

MAGANBHAI | | Permalink


Should not HMRC provide approprate facilities if they expect online filing for these companies.



georgerowell | | Permalink

Does anyone know the case name and reference?

Thank you.

Not only a good decision, but the right one.

Jekyll and Hyde | | Permalink

Well done to all those involved with this case and thank you.

johnjenkins's picture

This really is

johnjenkins | | Permalink

just the tip of the iceberg. Technology has roasted ahead while most are playing catch-up, including HMRC.

Government cannot just say ok everything on-line and then leave everyone to their own devices. Look what the banks are doing to reduce q's. All so that they can reduce staff. We all know that technology allows you to do the same with less staff. However if you want to use the technology prperly then you need more or exactly the same staff as before to enable you to make good use of said technology.

So HMRC haven't the staff to use the information they are gleaning and people without support get penalised.

I really hope this case goes all the way to high court and LITRG win. Maybe then those in power will think about the consequences of their actions.

Religious reasons

arnold28 | | Permalink

I believe that HMRC did intend to exempt people who would not file online for religious reasons. Does anyone know if this has ever been used? If it has, surely HMRC must have systems in place for dealing with the few paper returns it receives.

Digital by default not mandatory digital

scedwar | | Permalink

The Government digital strategy is clear that digital should be the default by making services so good that people prefer to use them. It doesn't say that departments such as HMRC should mandate digital, and prompt cases like these. 

The cases were:

LH Bishop Electric Company Ltd, Allan Frederick Sheldon t/a Aztec Distributors, Winston Robert Duff Tax t/a Rhos Filling Station, and Brinklow Marina Ltd v HMRC.




keithas's picture


keithas | | Permalink

"I wonder how the first group of people must have felt when the wheel was invented, I'm 110% sure a proportion of people refused to get on that cart and said "I would rather walk""

What a strange example: the wheel was invented thousands of years ago and it still, thank god, isn't mandatory that we travel only by vehicle. And, peculiar as it may seem, I still prefer to walk sometimes.

Likely HMRC responses

satprof | | Permalink

So, HMRC have had their knuckles lightly tapped, rightly so in my opinion. What are they likely to do about it? Having managed a computer operation in a UN Organization, it doesn't seem feasible to me that they will just accept paper filing again without making any administrative changes. Charging money to file manually is one way, but is unlikely to withstand a legal challenge in the UK, though there are other countries where the national administration charges you what it costs them to collect your taxes.

In practice, the most likely route is to cut the time they allow for filing if done manually. HMRC will clearly want to discourage manual filing, 'coz otherwise "everybody will be doing it" and it will cost them time and money. It is, however, also possible that they will erect a large and complex structure to 'validate' businesses' claims to file manually. The big advantage of this, from a civil service point of view, is that it will increase the size of several empires, leading to grade increases for those involved. All justified, of course, by this court decision.

Online filing service

hiu612 | | Permalink

As a firm, we have a number of older clients who have maintained their P11 cards, manual ledgers and paper VAT records for longer than i've been alive. As it happens, they tend to be amongst the best kept and accurate records we come accross. But online filing hasn't really caused them too much of a problem. They prepare the records and returns just as they always have. They phone us up with the numbers. And we file the return online. Every 3rd quarter we then charge them what is a pretty modest fee (£45 or so, i think). So the suggestion of 'forcing' taxpayers to incur the cost of an advisor may not be so burdensome as is being made out.

Online filing service    1 thanks

hiu612 | | Permalink

As a firm, we have a number of older clients who have maintained their P11 cards, manual ledgers and paper VAT records for longer than i've been alive. As it happens, they tend to be amongst the best kept and accurate records we come accross. But online filing hasn't really caused them too much of a problem. They prepare the records and returns just as they always have. They phone us up with the numbers. And we file the return online. Every 3rd quarter we then charge them what is a pretty modest fee (£45 or so, i think). So the suggestion of 'forcing' taxpayers to incur the cost of an advisor may not be so burdensome as is being made out.

Online Filing    1 thanks

malc901 | | Permalink

Online filing should be encouraged by HMRC but not made mandatory. A few years ago when payroll online filing was being introduced HMRC paid a tax free bonus to anyone filing their annual returns online, but this carrot has quickly turned into a stick.

Online Filing

tonyleigh | | Permalink

As far as I know, there's no legal requirement for the Internet to exist. Although unlikely, it's possible it may one day cease to exist, or become so spammed-up as to be unusable. I don't see how HMRC can require you to file on-line if there's no statutory underpinning for the required infrastructure.

johnjenkins's picture

Just think    1 thanks

johnjenkins | | Permalink

of all the penalties HMRC could charge if tinternet went down.

dear john jenkins    1 thanks

David Gordon FCCA | | Permalink


I do not have to "Think", I know.

 Due to a HMRC computer glitch last month, a couple of returns filed late.

 HMRC admitted the glitch and assisted in the repair.

 That was the "Right" hand.

 Neverthless penalty notices were received.

 The "Left" hand now insists that notwithstanding the circumstances, to have the two £100 penalties set aside, we are required to complete and go through the full appeal procedure.

 Use of computers.

My first office computer was an ICT, apple 48k look-a-like. 1979 vintage. Just me my secretary, the computer, and an IBM Golfball. I bought 70 Gregson audit exercise books and about 5 reams of paper which lasted a year.

 In my office today I have a server, four PCs, and associated printers scanners. Tax, accounts, & payroll software. I have about three times as many clients as in 1979. My clients are still exclusively one and two person businesses.

 In 2012 according to the meter, we used around 20,000 sheets of paper.

 It would be dangerous and foolhardy to stand within reach of me and tell me the use of computers has made the tax system more efficient.