The government has backed down in a legal dispute with the disabled owners of two small businesses, over whether they had to file their VAT returns online.
A tribunal ruled last year that forcing all VAT-registered businesses and sole traders to file their tax returns and pay their VAT online was a breach of the European Convention on Human Rights.
The successful claimants in the case were the owners of three small businesses. Two of them were disabled people, with impairments which made it difficult or painful to use a computer accurately, and the third lived in a remote area without broadband access.
The trio won their appeals in the First-Tier Tribunal Tax Chamber last September, with the judge concluding that “in so far as disability is concerned… HMRC have acted as no reasonable taxing authority could have acted”.
The judge found that mandatory online filing was a breach of the right to privacy, because HM Revenue and Customs (HMRC) expected people without computers to use one belonging to a friend or a public computer instead.
The rule also breached the right to be free from discrimination, because it had a disproportionate impact on older and disabled people, and the right to peaceful enjoyment of possessions, because it expected someone to purchase a computer or be trained in how to use one.
HMRC finally announced the new rules this week.
In a briefing document released on its website, HMRC said the tribunal had ruled that UK VAT law failed to take account of a person’s ability to comply with the rules on account of age, disability, computer literacy and remoteness of location and, “as such, was a breach of the European Convention on Human Rights”.
Following a consultation, VAT regulations have now been changed to allow an exemption “for businesses that satisfy HMRC that it is not reasonably practicable for them to use an online channel with the result that such businesses will be able to file on paper”.
The Equality and Human Rights Commission welcomed HMRC’s decision to change the rules.
Mark Hammond, EHRC’s chief executive, said: “This judgment shows how human rights protect the interests of small business owners, disabled people and older people in a very practical way.
“Human rights really are for all of us, and public bodies must ensure that their policies and actions respect everybody’s rights.”
31 July 2014
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