Digital exclusion: not pulling your finger out

David Whiscombe considers the significance for MTD of a recent VAT case.

Making Tax Digital (“MTD”) is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.”  HMRC’s words, not ours.

For some years it’s been obligatory to file VAT returns online.  The first phase of MTD builds on that by adding the requirement (from April 2019) that VAT registered businesses with an annual turnover above the VAT threshold (£85,000) must maintain records using software that is fully integrated with HMRC’s new digital gateway and able to send quarterly returns direct to HMRC.  Expansion of MTD into other areas of tax compliance will follow when (not if!) “the system has been shown to work well”.

Forcing taxpayers to keep all records electronically is perhaps all very well and good for the digitally literate.  But what of those who still think of mice as things that cats chase and to whom tablets are what the doctor prescribes when you’re poorly?

The MTD legislation addresses concerns of this kind by making special provision for the “digitally excluded”.  This inelegant phrase is defined in the same terms as those in which the VAT regulations exempt certain people from the existing obligation to file VAT returns online.

Thus, the recent Tribunal case of Glen Lyn Generations Ltd and Exmoor Coast Boat Cruises Ltd v HMRC [2018] UKFTT 0394, which concerned the scope of those VAT exemption conditions, takes on a wider relevance than it might otherwise have had.

The main circumstance in which exemption from online VAT filing applies is where “the Commissioners are satisfied that it is not reasonably practicable to make a return using an electronic return system … for reasons of disability, age, remoteness of location or any other reason”.

Mr Oxenham was a director and shareholder of both the companies involved and was responsible for filing their VAT returns.

HMRC did not dispute that Mr Oxenham was, at 52, of a generation that had not been exposed to computers at school or university and was not “computer literate”.  They nonetheless considered that it was “reasonably practicable” for returns to be made online: although meeting the statutory obligations could entail some degree of inconvenience, effort and expense, a distinction had to be drawn between what was not reasonably practicable and what was merely inconvenient.  Mr Oxenham’s lack of computer literacy did not mean that the online filing requirement was so onerous that a reasonable taxpayer would not be able to take steps to comply with it.  He could, for example, reasonably be expected to hire an agent to do the online filing for the companies.  As for his “age” being a bar, “age” should in HMRC’s view be read in the context of the exemption as applying to physical infirmities arising with age, rather than age per se.

The Tribunal held that it had “supervisory” jurisdiction in the matter.  That is, it was not entitled to remake the decision de novo: it was required only to determine whether HMRC had acted reasonably in making the decision and, if not, to remit the case to HMRC to have another go.

The Tribunal disagreed with HMRC’s analysis of the relevance of age, holding that “…the age of a person who is responsible for on-line filing can be a criterion in itself for the purposes of [the VAT rules] because the age of a taxpayer may be relevant to their ability to use a computer and deal with on-line filing” and that “it is [not] necessarily the case that someone who has had no, or very little exposure to computers during their formative years can readily learn to use a computer”.

Nonetheless, the Tribunal upheld HMRC’s decision.  It seems in this to have been influenced by two main factors.  First, the fact that both companies had historically filed Corporation Tax or VAT returns online made it difficult to say that it was not “reasonably practicable” for them to do so.  Second, Mr Oxenham had conducted over some time what the Tribunal described as a “moral crusade against the requirement to file on-line”: the Tribunal considered that that, rather than any question of reasonable practicability, underlay his objections.

The case underlines that the hurdle to secure exemption from online VAT filing (and, in due course, from meeting obligations under MTD) is a high one.  Nonetheless, the Tribunal’s recognition that “computer aptitude cannot be taken for granted, even in the twenty first century”, and that age per se may need to be taken into account, is welcome.

For more information, please get in touch with your usual BKL contact or use our enquiry form.

Hear more from David Whiscombe at our capital gains tax webinar on 13 September.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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