HMRC to relax online-only rule for VAT returns

HM Revenue & Customs has agreed to relax its strict rule requiring all VAT returns to only be filed online, in a proposal that campaigners for tax fairness are welcoming.

Following a consultation launched after a court found that the rule infringed business owners’ human rights, HMRC says it plans to allow telephone and, in some cases, paper filing.

In fact, businesses will be allowed to file their VAT returns over the phone where they can satisfy the department that it is not reasonably practical for them to file electronically.

But if reasons such as age, disability or remoteness of location also make it impractical for the taxpayer to file by telephone, they will be permitted to file their VAT return on paper.

HMRC adds that any business aggrieved by the department’s decision, if for example its officials refuse the taxpayer to file on paper or over the phone, will have a right of appeal.

Anthony Thomas, of the Low Incomes Tax Reforms Group, which supported the traders whose rights were infringed, said the changes meant two years of hard work had paid off.

“Until now, online returns have been mandatory unless the taxpayer is a practising member of a religious society…or a business in insolvency,” he reflected.

“[But] that requirement breached the human rights of those who were unable to file online because they were computer illiterate due to age, or had a disability that made using a computer accurately very difficult or painful, or they lived too remotely for a reliable internet connection.”

He added that while it was “regrettable” that the businesses owners, their advisers and taxpayers as a whole have had to wait so long for an outcome, it is “sensible and rational” one.

Elsewhere in its response to the consultation, HMRC says it will improve telephone filing on VAT returns by letting taxpayers ring them, instead of having to use the existing ‘call back’ service.

The department will also publish guidance on this dedicated VAT return phone-line and service outside of normal working hours, and plans to ensure it is more widely publicised. 

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