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UK Gov't To Respond To E-Filing Ruling

by Jason Gorringe,, London

09 December 2013

While the UK Chancellor George Osborne's Autumn statement was uneventful on the VAT front, the UK Government has committed to consult on amendments to regulations clarifying the exceptional circumstances in which HM Revenue and Customs will allow alternative options for VAT registered businesses that are not able to file VAT returns online.

The announcement in the Autumn statement comes after the two separate judgements from the UK's First Tier Tribunal in October. The Tribunal backed a group of taxpayers who contested that UK regulations introducing a mandatory electronic VAT return filing and payment requirement infringed their human rights.

The Tribunal agreed that the requirement should be waived in certain cases if the taxpayer is either elderly or disabled, lacks Internet access or objects to the use of computers on legitimate religious grounds. The Tribunal however dismissed one appeal brought by a taxpayer who contested that the online transmission of VAT returns and electronic payment was "unsafe."

Around 100 taxpayers filed appeals against the Regulations. Four taxpayers' appeals were selected as test cases and were jointly considered in one case by the Tribunal. After examining each of the taxpayers' exceptional circumstances, the court agreed that the filing and payment requirement infringed three of the four appellants' human rights due to either their lack of computer literacy, disability or lack of access to reliable Internet, or a combination of two or all.

Ahead of the announcement of the Autumn statement, a group of Conservative party members of parliament (MPs) called on the UK Prime Minister David Cameron to commit a substantial overhaul of the UK VAT regime to make it more business friendly by removing reduced rates and exemptions. Controversially, these proposals would impose VAT on childrens' clothes and food. The MPs, members of the Free Enterprise Group, have also called for a substantial increase to the UK's VAT registration threshold to GBP100,000 (USD163,600), from GBP79,000. They have also called on Cameron to pledge a concessionary 5 percent rate of VAT on construction work, arguing that for every GBP1 invested, GBP2.84 of economic output would be generated. The proposal, which may surface as part of the Conservative Government's re-election campaign, failed to be included in the Autumn statement.

TAGS: court | compliance | VAT rates | VAT tax authority guidance | VAT registration / deregistration | tax | business | value added tax (VAT) | mining | food | tax authority | construction | regulation | services | VAT goods & services classification | VAT compliance matters | Regulations

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