HMRC lost a tribunal after relying on Wikipedia for the definition of electromechanical switches to classify the correct commodity code.
Wikipedia is used as a useful resource, but due to the collaborative nature of the online encyclopaedia, where anyone can edit an article, the information shouldn’t be taken as gospel. For further proof of Wikipedia’s unreliability, look at the fallout from the number of false celebrity death claims which grace the wiki pages.
Universities distrust Wikipedia and some even mark down students for citing Wikipedia as a source. Harvard University advises students that “there is a considerable risk in relying on this source for your essays” and says Wikipedia should be used as a “basic reference guide”.
However, HMRC ignored this advice and used the online encyclopaedia not as a reference guide but to uphold a decision against an appeal. But the tribunal dismissed HMRC’s use of Wikipedia’s as evidence.
In the November first tier tribunal, RJS electronics [TC04870] disputed HMRC’s original decision which classified four switches the company sold under a commodity code which attracts a duty rate of 2.3% after researching the facts on Wikipedia. Instead, RJS claimed the switch should correctly be classified as “electromechanical snap-action switches for a current not exceeding 11A”, which carries a 0% duty rate.
In May 2014, HMRC’s review officer revealed the research basis of his decision. “There is little guidance on the type of product and the Wikipedia information is not altogether clear,” the review said.
The appellant disagreed with the review officer’s verdict. “It is very important that someone classifying electronic goods is not just reading some page on the internet but they have at least a minimal understanding of the electronic terms.”
As well as accusing HMRC of relying on Wikipedia as its source, RJS said HMRC ignored parts of the extract used which contradicted their ruling. HMRC also used a definition from the Oxford dictionary during the tribunal which defines electromechanical as “specifically designating a mechanical device which is electrically 10 operated or controlled,” but failed to acknowledge the opening definition which stated ‘both electrical and mechanical action’.
In the tribunal, RJS dismantled the switch device, showing the small spring which acts to either connect or disconnect the conductors, and referred to their competitors whose understanding was identical to theirs.
The tribunal sided with RJS, and ruled that switches are electromechanical as well as being snapaction. The tribunal dismissed the Wikipedia and OED examples as "not entirely consistent" and unreliable.
Should HMRC use Wikipedia as a source?
Whether HMRC should trust the reliability of a collaborative website has caused some commentators to question whether the over-complicated tax code is in need of review.
RSM’s George Bull said: “Are we seriously at the stage where HMRC file and serve its Statement of Case relying on a Wikipedia definition as if it were authority? That’s Wikipedia which defines itself as ‘the free encyclopaedia that anyone can edit’ and which, under the heading ‘Switch’ (a redirection from ‘electromagnetic switch’) states ‘This article needs additional citations for verification…’
“If so, then the tax code is in even more need of review than even the OTS recognise.”