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Barrister wins VAT efiling terms appeal

28th Jul 2015
iStock/BernardaSv

A self-employed barrister has overturned a £100 penalty issued by HMRC for failing to submit an online VAT return on the grounds that an earlier requirement to read HMRC’s terms and conditions relevant to online filing procedures was unlawful.

As set out in the decision on Neil Garrod v HMRC (TC4537), the barrister had no objection to submitting online returns, but did object to the requirement to tick a box when signing up on the government gateway to confirm that he had read HMRC’s terms and conditions for online filing.

When he submitted paper VAT returns instead in 2012 and 2013, he was hit with a £100 penalty from HMRC in July 2013 for failing to submit an electronic return for the March 2013 quarter.

Garrod complained about “unprovoked abuse” by HMRC (an issue not considered by the First-tier Tribunal chairman Barbara Mosedale) and objected to the quantity of the terms and conditions, which he felt would be “burdensome to read”.

The judge acknowledged that the terms ran to over 12 A4 pages of “fairly close print” and raised concerns conditions imposed on taxpayers such as, “you should regularly check your mailbox and delete old messages” - referring to the mailbox is hosted on HMRC’s website that the department uses to communicate with taxpayers.

HMRC argued that taxpayers did not need to agree to the terms and conditions, only to confirm they had been read, and that the content was only confirming details within primary and secondary legislation.

Mosedale disagreed and said that “the terms and conditions went beyond being a recital of the law”. She considered the legislation and concluded that HMRC had no power to impose it at all.

She added: “So seeking to impose the tick the box pre-condition was in these circumstances unlawful.  As the failure to tick the box was the cause of Mr Garrod’s failure to file online… the penalty was not lawfully imposed and must be discharged.” (para 139)

To rub salt into HMRC’s wounds, Mosedale also concluded that Mr Garrod had a “reasonable excuse” for not submitting online returns, so the penalty was invalid on this basis as well.

VAT enthusiasts will note that this is the third time that Mosedale has given HMRC a black eye on the issue of their powers and procedures. In the case of LH Bishop Electrical Company Ltd and others (TC2910), she ruled that the requirement for old and disabled people to file VAT returns online was a breach of human rights legislation. And in the case of Giu Hui Dong (TC3502), she concluded that the tribunal had the power to consider the legality of secondary legislation.

On a practical level, how many taxpayers actually read the terms and conditions of HMRC’s online procedures when they sign up with the government gateway? The answer is probably very few, if any. So is it time for HMRC to rethink their procedures and take account of the views expressed by Mosedale in her decision?   

Replies (30)

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By carnmores
29th Jul 2015 10:29

what a lovely person

one person can change the world but they do need power and authority

Thanks (6)
Quack
By Constantly Confused
29th Jul 2015 11:03

With my eyes...

... I keep seeing the 'l' in the forth title word as another 'I'...

Thanks (3)
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By dstickl
29th Jul 2015 11:25

B R A V O ...

B R A V O   ... First-tier Tribunal chairman Barbara Mosedale

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By RogerMT
29th Jul 2015 11:28

Drowned in T&Cs...

If only this ruling could apply to all online T&Cs! Who actually reads these things anyway?

Thanks (9)
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By janefg
29th Jul 2015 11:48

Drowned in T&Cs
The fact that T&Cs are so lengthy and convoluted means that people rarely read them. They tick the box to say they have and therefore are bound by them when the likes of Facebook and Google sell their details to all and sundry or change the T&Cs. It can mean that Google have a right to access all your emails or Facebook has the right to change your privacy settings without notice!

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By louisVW4
30th Jul 2015 16:15

Google, Facebook...

It's why I don't use Google email!

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By Spartacus54
29th Jul 2015 11:32

Double standards?

Reading the terms and conditions is too "burdensome", but taking this all the way to FTT, for the sake of £100 isn't? 

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By JohnBanks
29th Jul 2015 12:01

Not double standards at all

Two completely separate issues:

the £100 fine/penalty is an issue for the barrister onlyhaving to read the terms and conditions (and implicitly agree to them, whatever HMRC may say) is burdensome, and applies to all taxpayers. Therefore Mr Garrod was not just bringing a case on his own behalf but on behalf of all of us. For that he is to be thanked.

The lazy tick box approach of too many legal departments needs to be challenged. Perhaps the EU could issue a directive that means that any online terms and conditions that can't be printed on a single side of A4 paper (in 12 point type) shall be unenforceable?

Thanks (11)
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By moneymanager
29th Jul 2015 16:43

have you never

stood for a point of principal? Over dramatic as a comparrison perhaps, but this country has stood up to bullies before and the enemyof an over bearing bureaucracy is within the gates.

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By Brend201
31st Jul 2015 12:42

Principle?

moneymanager wrote:

Have you never stood for a point of principal? 

No. 

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By moneymanager
01st Aug 2015 20:54

I stand thankfully corrected and

hanged by my own pendantry.

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By carnmores
29th Jul 2015 11:37

like engagement letters

................

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By Duggimon
29th Jul 2015 11:41

T&Cs

There was a study done in 2008 that showed if the average person read all the terms and conditions they agreed to in a year it would take 76 days at eight hours a day.

 

http://www.theatlantic.com/technology/archive/2012/03/reading-the-privac...

 

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By David Gordon FCCA
29th Jul 2015 11:49

verry interesting

 

 So, may this erudite barrister apply the same argument to the ticks we have to bestow on updates of software and the like.

 Has anyone read the full terms and conditions from Sage, Microsoft, et al?

 

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By waltere
29th Jul 2015 11:51

We're all to blame...

Accountingweb's own terms & conditions are around 3,500 words! https://www.accountingweb.co.uk/terms  

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By keithas
29th Jul 2015 12:13

T & Cs and choice

Surely the issue is about our choice on whether to sign up to T & Cs. I will not, for example, sign up to a Google account as I won't agree to their terms. That does not give them the right to fine me £100.

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By Huw Williams
29th Jul 2015 12:19

It's the law

Surely the issue is about what is required by law.

You can choose not to sign up to Google.

You cannot choose not to sign up to pay VAT.

So Google can specify any T&Cs it likes and you can choose to accept them.

HMRC cannot abitrarily add to what you need to do to comply with the law.

Thanks (9)
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By trevv69
29th Jul 2015 13:09

It's the law, even if it:s a statutory instrument.

Huw Williams wrote:

Surely the issue is about what is required by law.

You can choose not to sign up to Google.

You cannot choose not to sign up to pay VAT.

So Google can specify any T&Cs it likes and you can choose to accept them.

HMRC cannot abitrarily add to what you need to do to comply with the law.

Unless the law gives the power to HMRC so to do, of course.

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By posty133
29th Jul 2015 12:39

This is great news and well done to Neil. The only thing I will say, for every one lawyer/barrister who challenges this type of T&C's, there are another 100 (at least) dreaming up more convoluted ways to tie people in to them.

Choice is not always an option, have you tried living without the internet in this day and age and look at the T&C's in those contracts?

In my opinion, for what it is worth, we will always be over burdened by T&C's and law, as the general population gets wiser to practices, new, more complicated ones take there place and always will as long as there is demand for it and it is profitable.

It is made so dam difficult, expensive and time consuming for most people to challenge them In this way.

 

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By Duggimon
29th Jul 2015 12:41

Legally binding

Terms and conditions which contain anything that would not be reasonably expected to be in there are not legally binding regardless of whether a consumer ticks to say they have read them. I believe this has been held up in court before.

 

If a company includes something in their terms and conditions which is non-standard for the type of business they operate they are legally obliged to highlight this to the consumer and not merely include it in point 84, paragraph 8, subsection B of whatever massive document they require you to lie about having read.

 

As I say I'm sure I remember from my brief stint of business law with ICAS that these points have come up in court cases and the company was found to be at fault for including non-standard terms in a document the consumer had nominally agreed to but had not read due to its excessive length.

 

edit: of course, what could be considered non-standard for the type of business is no doubt a matter for some debate.

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By robertcl
29th Jul 2015 13:35

EU

An EU directive (I can't find the right one, as the EU-LEX database is notoriously difficult to operate) actually requires all agreements to be printed and signed by both parties in order to be enforceable, but who does that?

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By Ermintrude
29th Jul 2015 13:42

Unfair Terms In Contracts (or as I think of it, Taking The Piss[***])

I sign first, argue later. 

Per www.gov.uk

Your contract terms might (also) be unfair if they weigh the contract significantly in your favour, eg:

excessive cancellation charges and automatic loss of all upfront paymentsunbalanced rights, eg being able to cancel a contract at any time, but requiring the customer to give 3 months’ noticebeing able to change the agreed price for any reason at a later dateContracts must be written in plain language to avoid being misleading and unfair.

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By raybackler
29th Jul 2015 14:30

Unfair Contract Terms Act 1977

There is a reasonableness test in Schedule 2 of this Act:

(a) mentions the relative strength of the bargaining parties.

(b) mentions the opportunity to go elsewhere.

We have no bargaining power with HMRC and no opportunity to obtain this service elsewhere.

I think what this barrister has done is amazing.  I am sure he stood on a point of principle and has been thoroughly vindicated.  It is not just HMRC who abuse Terms and Conditions, as others have mentioned.  You can't do anything on the internet without ticking those infernal boxes.  We have no bargaining power with Apple, Microsoft, Ebay, Amazon etc and in all of these cases, no real option to go elsewhere.

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Stepurhan
By stepurhan
29th Jul 2015 14:39

The Dilbert view

T & C's being too complicated is not a new issue.

See this Dilbert cartoon from way back in 1997.

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By anndartnall
29th Jul 2015 14:59

Mosedale Rocks

A very sensible decision over a power hungry government whose motto seems to be "if it moves, fine it to generate extra revenue".

As far as T's & C's go in essence for computer software in this instance;-

We (xyz Ltd, it's products and employees) take absolutely no responsibility for any harm it may do to the purchaser's data, reputation, computers, bottom line and mental health unless we cannot get out of it by statute. If we don't like the look of you, we may withdraw our software at any time or insist that you have an upgrade which may well cause you problems and certainly loss of time on a new learning curve (but, hey, we are wearing the big boots here).

Welcome to XYZeasy software and congratulations on your purchase!

 

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By AndrewV12
30th Jul 2015 08:09

Well done Neil

Well done, I would not know where to start challenging that issue, but its what i always say, everything or service we buy is saturated in disclaimers, get out clauses etc, however most of these when held up to the light are   worthless, some say un-ethical.  

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By trevv69
31st Jul 2015 15:53

which makes one wonder...
...if there shouldn't be some penalty for putting up t&cs that purport to be the legal position but which are in fact - and perhaps known or should be known to these organisations - not effective. A kind of constructive fraud, perhaps?

As we would surely all agree, whatever the position for elective services provided by private companies, HMRC & other govt agencies must be held to a higher standard for compulsory ones.

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By Ermintrude
03rd Aug 2015 09:43

@brend201

That's a real shame.

These reproduced quotes are reminded on a highly principled bloggers homepage (Carmarthenplanning.blogspot.co.uk):-

 

Anyone who challenges the prevailing orthodoxy finds himself silenced with 
surprising effectivenessGeorge Orwell   Unthinking respect for authority is the greatest enemy of truthAlbert Einstein  

The penalty good men pay for indifference to public affairs is to be 
ruled by evil men.

 

Plato (..on apathy)

 

 

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By Brend201
03rd Aug 2015 10:46

Ermintrude wrote:

Ermintrude wrote:

That's a real shame

Sorry to have distressed you. Fortunately, moneymanager understands what I was getting at!

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By Ermintrude
03rd Aug 2015 15:04

Oh - right - yeah - I see now!

I noted the misspelling but chose to overlook it and therefore missed your point, Brend!

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