SELF-EMPLOYED CORONAVIRUS SCHEME

IT IS NOW TOO LATE TO CLAIM UNDER THE ORIGINAL SELF-EMPLOYMENT INCOME SUPPORT SCHEME (SEISS). APPLICATIONS CLOSED ON 

13 JULY 2020. 

A NEW AND LESS VALUABLE SCHEME CAN BE CLAIMED FROM MID-AUGUST.  

However, if you failed one or more of the tests in 2018/19 because you were not earning due to pregnancy or maternity you can claim for the first scheme and the second scheme sometime in August. See Maternity below. New rules here.

THIS BLOGPOST IS NO LONGER UPDATED.

Applying
By now if HMRC thinks you are entitled you should have received a letter inviting you to claim and explaining how. 

If you have not heard and think you are entitled try the online checker . If it says 'no' then

1. read this guide carefully to see why that might be (the checker does not give the reason why you failed, just a list of possibles).
2. Try again making sure you enter your 10 digit Unique Tax Reference and your National Insurance number carefully - it is very fussy.
3. If still 'no' ask for a review. 
4. If that comes back 'no' it will give a reason. The one most people fail on is the 50% rule - explained below.
5. If you still think you are entitled, return to this blog for more advice as we do not know yet what the next step might be. But the indication is there will be no simple right to appeal further.

Reluctant to claim?
Some people who would be entitled are saying they are reluctant to pursue their claim. They are put off by a question in the application process which asks them to confirm that their self-employment business has been 'adversely affected' by the coronavirus crisis. They are unclear what that phrase means and are afraid HMRC may challenge their view of what is 'adversely affected'.

HMRC gave me these examples of what would constitute being 'adversely affected'

You’re unable to work because you’re:  

·         shielding 

·         self-isolating 

·         on sick leave because of coronavirus 

·         have caring responsibilities because of coronavirus

You’ve had to scale down or temporarily stop trading because:  

·         your supply chain has been interrupted 

·         you have fewer or no customers or clients 

·         your staff are unable to come in to work 

It also said that people claiming the SEISS grant should keep records of how the business has been adversely affected. That could include 

• business accounts showing a reduction in turnover 
• dates your business had to close due to lockdown restrictions
• dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities due to school closures. 

HMRC would give no guidance on how much 'reduction in turnover' would be enough to claim. It seems to be up to you to say how much would amount to 'adversely affected'. In my opinion that would be any reduction in your business turnover or profit. Or even no change if you had to work harder to achieve it.

One other point. As far as the law is concerned it does not matter if you need the money or not - though clearly most people who claim will need it badly. The law set out in this Treasury Direction makes no mention of needing the money. Apart from the two tests built into the scheme, there is no means-test of your income and none at all of your capital. The income or capital of your spouse or partner is not assessed. So if you have money in the bank or your spouse is still working full time that is neither here nor there as far as the law for claiming the SEISS is concerned.

My advice is to claim if you are entitled. Clearly if business is booming under coronavirus then don't claim. But if you turnover or profits have been reduced in any way by any amount or you're having to work harder to stand still because of coronavirus there is no reason I can see for you not to claim. The money is there to help your business over that difficult patch. If you can argue your business has been adversely affected you have a right to this money. 

The Scheme
The Government scheme to help self-employed people will leave out millions of those who have income from self-employment. Even Her Majesty's Revenue & Customs admits only 66% will be helped. It will not be 95% of self-employed people as Ministers and others have said. The Government admits two million will be left out - we now know it could be double that.

If you live in Scotland you may get a £2000 grant if you are excluded from the UK scheme because you began your self-employment in 2019/20. The grant is accessed through your local authority. However, you will not get it if you have already claimed Universal Credit. See EXCLUDED Scotland below.

Tweet or DM me @paullewismoney with corrections and questions. I may not be able to answer them all personally.

Numbers

The Office for National Statistics says at the end of 2019 there were a shade over five million self-employed people. But the Government says 5.75 million are registered with HMRC as self-employed. It has said its  Self-employment Income Support Scheme announced on 26 March 2020 will help 3.8 million of them.

HMRC has told me that two groups are excluded because

• Less than half their income came from self-employment. It says that is 30% of the 5.75 million or about 1.75 million people OR
• Their profits from self-employment were £50,000 or more. It says that is 4% of the total or around 230,000 people. 

Those two groups reduce the 5.75 million registered to about 3.8 million - the number it says will be helped (though by 4 May it was saying 'around 3.5 million'.)

Those Government figures fail to count four excluded groups.

• People who began their self-employment in the tax year 2019/20 that is since 6 April last year. New figures from the Office for National Statistics show there were 150,000 in the first nine months of 2019/20 which would gross up to around 200,000 in the whole year. However, ONS has told me that is 'a lower bound' and that "Over the past five years, the proportion who have been continually self-employed for less than 12 months is around 10%. Over the last five years it is between 450,000 and 500,000."
• People who began their self-employment in 2018/19 but did not register because the business was too small or they forgot. A new self-employment should be registered by 5 October in the tax year after it begins. We do not know how many register each year because HMRC does not produce the statistics. 
• People who consider themselves self-employed but trade through a limited company of which they are a director. The Institute for Directors estimates there are 800,000 limited companies with between 0 and 9 staff. Another estimate is that half a million people trade through a personal service company. These new ONS figures show that of those saying they are self-employed 715,000 are a sole director of a limited business and 935,000 say they are running a business. The two groups overlap so should not be added together. 
• Those who earn very little and did not register - though they should have done if their turnover exceeded the level of the trading allowance which is £1000.

The Scheme

The Self-employment Income Support Scheme gives self-employed people who qualify 80% of their average annual profits divided by twelve to give a monthly amount and the multiplied by three to give a three monthly amount. That will be paid in one lump sum in early June 2020. There is an upper limit of £2500 a month or £7500 over the three months. That upper limit will apply to people with average annual self-employed profits of £37,500 to £50,000. Others can work out their payment by dividing their annual profits by five. The lump sum will form part of their income in 2020/21 and be subject to income tax and National Insurance. It will count as income when working out entitlement to tax credits. Ferret Information Systems have produced this helpful calculator

And the formal Treasury rules were published on 30 April and the official guidance was updated on 13 May. The rules have changed the conditions slightly. 'Less than £50,000' has become '£50,000 or less' and 'more than half' has become 'at least 50%'.

To be eligible you must pass seven tests.

1.  You must have filled in a self-assessment tax return in the year 2018/19 and submitted it by the extended date of 23 April 2020. 

2. In that tax return you must have filled in the self-employment or partnership pages. Property pages filled in by landlords and others are not part of the scheme.

3. You must have traded in 2019/20 and still be trading when you apply or would be but for COVID-19 and you must intend to continue to trade in 2020/21. Neither of those years will count towards the amount of grant you get. 

4. Your business must have been adversely affected by the Coronavirus outbreak. That includes restrictions on yourself due to health or other reasons. 

5. Your annual profits must be £50,000 or less. That is defined as taxable profits after expenses and capital allowances but before pension contributions or charitable donations.

You can fulfil the profits condition in two ways –

a) Your profits in 2018/19 were £50,000 or less

OR
b) Your average annual profits over the three tax years 2016/17, 2017/18, and 2018/19 were less than £50,000. If you were not self-employed in 2016/17 then the average is taken over two years. It cannot be taken over 2016/17 and 2018/19. 

6. At least 50% of your income in a tax year must come from self-employment.

You can fulfil this condition in two ways –
a) At least 50% of your income in 2018/19 was from self-employment

OR
b) Your average income from self-employment formed at least 50% of your income over the last three tax years 2016/17, 2017/18, and 2018/19. If you were not self-employed in 2016/17 then the average is taken over two years. It cannot be taken over 2016/17 and 2018/19. 

Income is all taxable income other than that from self-employment. It includes wages, income from property, private and state pensions, any taxable social security benefits, interest on savings, returns on investments, any other taxable income. If you consider yourself self-employed but do short stints on contracts paid through PAYE the gorss amount counts as employed income not self-employed profits and will work against you passing the 50% rule. Guidance on how HMRC works out profits and other income was updated on 7 May. All the amounts used for the calculation are taken from the Self Assessment form. The calculation uses different years for those subject to the Loan Charge.

7. You apply for the scheme and are accepted.

HMRC holds most of the data it needs and from 13 May has been writing, emailing, or texting people it thinks qualify to invite them to apply. They then have to check their entitlement on the HMRC checker and if the answer is 'entitled' they will be told when and how to apply. Never click on links in response to an email or text even if it appears genuine. It is safer to go to the HMRC checker direct.

If successful the money will be paid direct into the nominated bank account by 25 May. If the checker says you are not entitled it will not say why. There is a procedure to challenge the checker but the response which will come later in the month is more likely to be an explanation of why you have failed rather than a change in the decision. 

It is very important to put the correct and up to date information into the form. It needs your 10 digit Unique Tax Reference (UTR) and your National Insurance Number both of which are on HMRC letters to you about self-assessment. . If you make a mistake it will say 'no'. However you can try again - without limit - to get it right. Before 13 May it did not have all the data uploaded so it gave some false 'no's. If that happened to you then try again now.

If you are accepted you are not restricted from pursuing your business. Unlike the similar scheme for furloughing employees you can get the money and work at your self-employment or indeed in a separate job as long as you fulfil rule 3 above.

If you qualify for this scheme and also have a separate job as an employee you can claim from the self-employment scheme and be furloughed by your employer in the job. See my updated blogpost on the Coronavirus Job Retention Scheme.

There is no upper age limit.

Beware thieves contacting you by text, phone, or email offering you money from HMRC. Do not click on any link or speak to anyone. Hang up or delete

Universal Credit

The Government says if you cannot wait three months for the money then you should claim Universal Credit - if you are under state pension age - to fill the gap. Not everyone can do that and it will take a lot of persistence as hundreds of thousands of people are trying to get it. Find out how to claim on the Government website. Before you do that you can check your entitlement to means-tested benefits including Universal Credit at Turn2Us. Savings over £6000 will reduce UC and savings over £16,000 exclude you. A couple has their income and savings counted jointly. People over state pension age - almost 66 at the moment - should claim pension credit which is almost double the rates for Universal Credit.

If you do successfully claim Universal Credit it will give you an income until the payment is made. However, UC does not start for five weeks after you are awarded it. So you will have to claim an advance payment. Despite its name that is just a loan which will be repaid by deductions from your future Universal Credit, normally over the next twelve months.

WARNING: If you already get tax credits it is probably best not to claim Universal Credit as it may well be worth less and you cannot then go back to tax credits. That is true even if you do not qualify for Universal Credit. Seek advice - Citizens Advice is probably the best place to start.

When you get your self-employment payment that will affect your Universal Credit. The Government has now confirmed the payment in late May will be treated as earned income in that assessment period. That will be taken into account when your next Universal Credit payment is made and will probably wipe it out. It will not affect earlier payments so you will not have to repay any Universal Credit you have had, except of course the advance payment if there is still an amount outstanding. The next month you will have to reclaim UC, which is easy and does not normally involve a five week wait. If your late May payment is very big - well over £2500 - it may reduce the payments you get or even prevent a claim.

WARNING: In Scotland if you have claimed Universal Credit - even if you have not received a payment yet - you are excluded from the Scottish Newly Self-Employed Hardship Fund. 

EXCLUDED

Newly self-employed

Those who began self-employment in 2019/20 are contacting me in large numbers. They feel the hardest done by as they get nothing despite being perhaps 11 months into self-employment but with dreams shattered by the epidemic. At least one petition has been launched to challenge this rule.

HMRC have made it completely clear to me again that there are no exceptions to this rule: to qualify for the scheme an individual must have completed the 2018/19 tax return in time (which is no later than 23 April 2020). So those who began self-employment from 6 April 2019 are excluded.  

New figures given to me by Office for National Statistics show there were 150,000 people who are still self-employed at the end of 2019 who began self-employment in the first nine months of 2019/20. That implies over the whole tax year to day about 200,000 excluded people. However, ONS has told me that is 'a lower bound' and that "Over the past five years, the proportion who have been continually self-employed for less than 12 months is around 10%. Over the last five years it is between 450,000 and 500,000."

Scotland

If you live in Scotland you may get a £2000 grant if you are excluded from the UK scheme because you began your self-employment in 2019/20. The grant is accessed through your local authority. Payment is promised within ten days. You must fulfil the other conditions for UK help with more than 50% (not at least half) of your income in 2019/20 coming from self-employment and your trading profits in 2019/20 must be below £50,000 (not £50,000 or less). 

However, you will be excluded from this scheme too if you have claimed Universal Credit, even if you have not received a payment yet. You will also be excluded if you receive Statutory Sick Pay, Employment and Support Allowance, Job Seekers’ Allowance, or Income Support. See the Scottish rules.

The £35m budget indicates that just 17,500 people are expected to qualify.

Not a hobby

The massive group of 1.75 million 'part-time' self employed are also being excluded unless more than half their income comes from self-employment. There are many who consider themselves self-employed but have to take paid employment to make ends meets and pay their rent and feed themselves and their family while their business grows. These are not pursuing a hobby on the side but developing their business which may later become successful. They are being excluded if they fail this 'over 50%' test now.

The 50% rule is turning out to be the main reason people unexpectedly fail to get a grant. It is hitting pensioners particularly hard as both private and state pensions count as 'other income' and if the total is more than the self-employed profits no grant is paid.

The rule also treats very badly people who moved from employment to self employment in 2018/2019 and did fill in a tax return. They can fail the 50% test if their time as an employee earned them more than their later time as self-employed. In some cases they could have been working as self employed for well over a year. But they are excluded. In 2018/19 a total of 750,000 people moved from employment to self-employment. If they earned less from their new self-employment than their previous employment in that tax year they are excluded. We also know now that 431,000 people who are self-employed now began to be so in 2018/19. The later in the year they began the more likely they will be caught by the 50% rule.

HMRC has confirmed that there is no provision to gross up the profits earned over a few months to give a yearly amount. If someone worked part of the year as self-employed it is the actual profits over the period of self-employment that is counted for all the rules.

Pregnant or new mothers or claimed maternity allowance

New rules mean that women who were pregnant or claimed maternity allowance in 2018/19 may now be eligible for the scheme. They can use 2017/18 or 2016/17 and 2017/18 instead of 2018/19. Maternity allowance is not counted as 'other income' in 2018/19 and you are treated as 'still trading'. If you get a SEISS payment the new rule does not mean it will be increased. But if you did not qualify it does mean you may do so now. See the new rules https://bit.ly/2AAatyq You can claim in August.

Profit ceiling

People whose profits are above £50,000 are excluded even though they may be as much in need as those who make £49,999. The Treasury said it has to have a limit to make it affordable. However, if people with profits above £50,000 were included they would be caught by the upper limit and limited to a payment of £7500. HMRC estimates there are 230,000 of them so the extra cost would be £1.72 billion on top of the £9 billion the Chancellor says the scheme will cost. However between 40% and 47% of the cost would be recouped through tax and National Insurance.

Given the 'whatever it takes' approach to the crisis the net cost of no more than £1 billion is not prohibitive. The Government is more likely concerned about how it would look to give a £7500 handout to the already very profitable self-employed such as some TV presenters and some barristers. Hence the Chancellor's statement that the average pay of these people is £250,000. True but misleading. Many will be caught by this rule who are not much above the average pay in London.

The similar scheme for employees placed on furlough has the same maximum payment of £2500 a month for three months but there is no income ceiling. Someone on annual pay of £250,000 could be furloughed and get £2500 a month to do nothing.

People who have used the profits of their business to invest in the future and have high expenses and capital allowances will have what they may see as artificially low profits and get little from the scheme. On the other hand some with very high profits who have also invested heavily in their business will be in scope of it because those investments will reduce their taxable profits. 

Directors
At the end of 2019 a new ONS report says that 715,000 people who consider themselves self-employed traded as the sole director of a limited company. Many of them pay themselves a small salary out of the profits and take the rest as dividends. That has - or had - significant tax advantages. They could pay a lot less tax than if they paid themselves all the profits as salary. Many do not choose to work in this way -- it is forced onto them by the firms that engage them. This group is specifically excluded from the Self Employed Income Support Scheme. Instead the Government has suggested they claim under the furlough scheme for employees. 

It is possible for sole directors to furlough themselves and fulfil their statutory duties as directors. That means directors of limited companies can furlough themselves in their capacity as employees or office holders of their company, and claim a grant under the Coronavirus Job Retention Scheme to cover 80% of the regular salary that they have paid themselves via PAYE, up to a cap of £2,500 a month. However, those sole directors who have paid themselves mainly in dividends will get very little - just 80% of their regular pay. Dividends do not count as pay. Many will not qualify for the CJRS because pay themselves wages once a year and if that is at the end of March they will be excluded from it by the cut off date of 19 March on payroll.

For companies with a sole director, their statutory and administrative responsibilities under company law should not impinge on their ability to furlough themselves as employees for the purposes of this scheme, as long as they do no work beyond this.

THIS BLOG REFLECTS THE RULES AS I UNDERSTAND THEM AT THE DATE AND TIME INDICATED. IT DOES NOT CONSTITUTE ADVICE AND SHOULD NOT BE RELIED ON TO MAKE DECISIONS THAT WILL AFFECT YOU FINANCIALLY.

Paul Lewis

23 May 2020

version 2.61

DWP CANNOT ENFORCE DEMANDS TO REPAY PENSIONS PAID AFTER DEATH

When someone dies the Department for Work and Pensions routinely sends out letters to relatives demanding they return money which the Department has paid after the person died. 

It has no powers to enforce these payments.

After someone dies, the death has to be reported within five days (eight in Scotland) by a relative or someone present at the death. They are normally asked to use the official service called ‘Tell us Once’ which informs all government and local government offices about the death. That service will then cancel benefits, passports, driving licences, disabled badges, council tax and so on. 

Although Tell us Once is run by the Department for Work and Pensions it still takes a little while to stop state pension and benefit payments. So it is common for one or two payments to be credited after the death to the bank account of the person who has died. 

The Department automatically writes to relatives and executors asking them to refund these after death payments. Often the letter will go to the relative who registered the death. These letters imply that the money has to be repaid.

"when public funds are incorrectly paid we are obliged to ask for them to be refunded…We recommend you use the Bank Giro Credit slip enclosed.”

Each year the Department sends letters to hundreds of thousands of relatives and they send back more tens of millions of pounds even though it has no power to force them to do so.

No power

When asked directly the Department is very clear that it has no power to enforce these repayments. So such letters can safely be ignored (but see DO NOT IGNORE below for when you should not ignore a letter).

Here is what the Department said in an official statement by email to me on 8 March 2019

"There is no legal obligation to repay a debt of this type."

And here is what the Department section that sends out the letters said to me personally when I asked for the legal provision under which it was asking me to refund pension payments made to my mother. 

"We cannot however enforce recovery of overpaid benefit."

Only once
The Department also told me that only one letter seeking to recover this money is sent. If it is ignored then no others are sent. A Freedom of Information response of 23 April 2019 makes this procedure clear

"If payment is not received no further action is taken and the debts are automatically written off."

So the safest thing to do with such a letter is to ignore it.

If you are not happy doing that then write back asking what statutory power the DWP is relying on to recover the money. It will then respond to say it has no power. You can then confidently ignore the payment demand.

The Freedom of Information response reveals that in 2017/18 the Department sent 392,000 letters to 282,000 people (more than one benefit is often involved). And it recovered £53,295,000 from them even though it has no power to do so and they have no obligation to repay the money.

As the FoI says "we do ask for these funds to be repaid on a voluntary basis".

It is important to use the Tell Us Once service when the death is registered. In areas where that is not used, then inform the DWP directly of the death as soon as you can. 

I must stress that this lack of recovery powers only applies to payments made after the death. 

Common law

It is unfortunate that solicitors who act as executors seem to give in to the DWP and repay the sums demanded. Some seem to think that the DWP can recover the money using the common law power of restitution. However that was considered by the Supreme Court in a different case and on 8 December 2010 the Court held unanimously that common law could not be used to recover money paid by official error - which this is. 

The case is [2010] UKSC54 and para.2 sets the context 

"This question arises, for example, where a claimant has notified a change of circumstances...and by mistake the Department overlooks (or delays actioning) the notification and continues making benefit payments" 

The judgement is in para.15 

"For better or for worse those benefiting from official errors are not subject to recovery proceedings. I am persuaded that section 71 [of the Social Security Administration Act 1992] does indeed necessarily exclude whatever common law restitution rights the Secretary of State might otherwise have."

Since this case the Department has not claimed it has common law rights to such money. 

If you use a solicitor as an executor it may be worth pointing this out to them before they send the Department money which it has no legal right to. And if they do repay it then you could ask the solicitor to pay that sum to the heirs.

DO NOT IGNORE

There are some benefit and pension payments that the DWP does have the power to recover.

It has powers to recover money that has been overpaid in the individual's lifetime which was not due to official error. Those letters should not be ignored but the money may still not have to be paid.

There are two common scenarios.

First, the deceased may already have a debt to pay to the DWP due to a benefit being overpaid while they were alive.

Second, information that emerges as part of the probate process may indicate that the deceased was not entitled to a benefit which they claimed and received while they were alive. For example, they may have more savings than they had informed the DWP about which would have reduced or wiped out their entitlement to means-tested pension credit. 

In those cases the DWP will try to find the information about their savings going back many years. 

These demands are always worth challenging initially. Ask the DWP under what legal powers it is asking for the information and under what legal powers it is seeking to recover the money. If the answer is it has no legal power then you can probably ignore the demands.

Even where the DWP has the power to recover money the debt can only be recovered from the estate of the deceased. If the individual has died with little and there is nothing left after funeral expenses have been paid then their estate is insolvent and the debt should be written off. It cannot be recovered from relatives.

However, if there was money in the estate then the DWP can still make a claim against the estate, even if it has been distributed to relatives. That claim should only be made against the executors, who may be relatives or who may be solicitors. If a solicitor or other executor has distributed the estate to the heirs before the DWP enquiry then they may be liable to pay the money. 

Anyone in this position needs to get legal advice. If local solicitors are too expensive there may be a law centre nearby - use the Law Centres Network website to find one. If there is not one nearby the website also has useful links to other sources of free legal advice.

Other debts and overpayments

Requests for tax from HMRC or from a private or company pension provider should not be ignored. However, it is always worth writing to ask under what power the demand for repayment is made. And if necessary seeking legal advice.

Paul Lewis

6 May 2019

v. 1.50

HMRC LOAN CHARGE BRIEFING PACK

HMRC publishes briefing pack on the loan charge.

On 18 March 2019 HMRC published this Loan Charge Briefing Pack for journalists to set out is position as 5 April approaches explaining its view that the Loan Charge is fair and necessary.

It is not available online yet so it is published here for the benefit of everyone who wants to see it.

Publishing it is not an endorsement of its contents on which I make no other comment.

It is Crown Copyright © 2019.

Paul Lewis
18 March 2019

CLAIM £200 to £500 FOR FLIGHT DELAYS

UPDATED 5 January 2021

This blog looks at some of the fiddlier details of getting compensation for flight delays. Since the UK left the EU the compensation rules have been written into UK law. They are explained in this new blog. 

All the European court judgements mentioned here still apply as they were all retained in UK law when we left the EU. Any decisions made by European courts from 1 January 2021 will not apply in the UK.

What is extraordinary?

The European Regulation EC 261/2004, which makes the compensation rules, gives airlines a get out clause for what are called ‘extraordinary circumstances’. In other words if the delay is absolutely not the airline's fault then compensation is not due.

A dispute is brewing about delays caused by strike action. In 2018 the European Court of Justice ruled that a wildcat strike by airline staff – one that was not properly balloted or announced – was not an extraordinary circumstance after the airline had made a surprise announcement about restructuring. So compensation was due for the delays it caused. The Civil Aviation Authority has now said that strikes are covered by the compensation rules. In particular the strike by Ryanair crews in July 2018 is covered. Ryanair, BA, and Air France disagree. The dispute may end up in court. Strikes by workers outside the airline such as air traffic control or baggage handlers are not covered by the compensation rules but strikes by workers within the airline are. 

Technical issues

Airlines can no longer use technical issues including mechanical failure as an excuse for not paying compensation. Many airlines have been calling technical issues with their aeroplanes extraordinary circumstances and refusing to pay compensation for the delays they cause.

But in June 2014 in a clear and unanimous judgment the Court of Appeal decided in a case against budget airline Jet2 that technical issues were part and parcel of running an airline and that the delays they caused could in no sense be ‘extraordinary’.

Jet2 tried to get the Supreme Court to look at that decision. But it refused to do so. The judgement releases tens of thousands of claims against many different airlines which have been held pending the court case. And any fresh claims for delay compensation because of technical issues such as mechanical failure should be successful. One law firm estimates more than two million passengers a year are delayed due to technical issues.

Some airlines tried to claim that unexpected or hidden technical defects were extraordinary circumstances. But in its landmark case in September 2015, van der Lans v KLM, the European Court of Justice ruled that such unforeseen defects could only be allowed as exceptional if they were, for example, a defect the manufacturer or a regulatory body discovered and announced. Anything else was just a normal part of running a complex system like an airline.

Back six years

Another important decision by the Court of Appeal was in a case against Thomson Airways. It ruled that cases for compensation for delay could go back six years rather than two. Thomson had been refusing claims which were more than two years old on the grounds that the Montreal Convention only allowed claims for that period. But the Court of Appeal decided unanimously that local law prevails so claims can go back for six years in England and Wales. The six year limit applies in Northern Ireland but it is only five years in Scotland. See section Jurisdiction below.Thomson also tried to get the Supreme Court to revisit that decision. And again the Court refused saying the airline had no arguable case. So all airlines must now allow compensation claims for delays that occurred up to six years ago.

A further case Goel & Trivedi v Ryanair was tried in Manchester in August 2015. Ryanair claims that a provision in its own terms and conditions limits claims to two years which overrides the EU Directive. Ryanair lost the case but is appealing. It is possible that Ryanair and other airlines may try to delay claims for delays between two and six years ago until this case is finally settled. However, in a statement in September 2015 Ryanair said it did allow claims up to six year, though there is a lot of evidence that it does not.

Application

The EU Directive on compensation applies to cancellation. But the courts have interpreted the law so a delay of at least three hours is considered to be the same as a cancellation and give rights to compensation.

The delay must be at least three hours and that is measured at the arrival airport. So a flight that leaves more than three hours late but makes up the time and arrives 2h59m late would not be covered. The arrival time was recently defined by the European Court of Justice as the moment when at least one of the aircraft doors is opened at the arrival airport.

Compensation applies to the whole journey even if the flight involves a change of aircraft at an airport outside the EU as long as if it was booked as one journey and departs from the EU. This was decided by the European Court of Justice on 31 May 2018

Compensation for cancellation is more complex but similar. If your flight has been cancelled within seven days before the original flight time - for example once you are at the airport - compensation will almost always be paid. If you are not offered an alternative flight it will be paid at similar rates to those above. If you are offered an alternative flight but it arrives two hours later - or departs one hour earlier earlier - than the original flight then similar compensation will be paid. The rules are complex but always claim if a flight is cancelled. Compensation for flights cancelled by the airline with more notice than seven days are different.

These rights are separate to any money or vouchers for a hotel, travel, or food paid by the airline. It has to make those payments as well even where there are extraordinary circumstances which prevent compensation being paid.

Exceptions

Airlines can get out of paying if the delay or cancellation was due to 'extraordinary circumstances'. There is no definition in the law but that can include industrial action outside the airline's own personnel, extreme weather, war, terrorism, sabotage, political or civil unrest, hidden manufacturing defects, and bird strikes. But it can no longer include technical issues such as mechanical defects even if they were unforeseeable. Nor can it include computer system failures as large companies should always be available. In rare circumstances computer failure due to a major hacking attack may be argued to be 'extraordinary'. It probably does not include strikes by the airline's own staff, though that is subject to dispute.

Jurisdiction

Although the EU directive applies throughout the 28 member states of the EU, the Supreme Court ruling only binds courts in England and Wales. Lawyers say it would be 'persuasive' in Scotland and Northern Ireland. 

Enforcing your rights
In England and Wales you can use the online service via the Government website.

The court cases to cite are: 

• For strikes Helga Krüsemann and Others v TUIfly GmbH 17 April 2018
• For connecting flights Claudia Wegener v Royal Air Maroc SA 31 May 2018
• For time limits, Dawson v Thomson Airways [2014] EWCA Civ 845. 
• For technical issues, Jet2.com v Ronald Huzar [2014] EWCA Civ 791.
• and the latest case 17 September 2015 on technical issue van der Lans v KLM C-257/14 
• The Supreme Court refusal to hear the further appeals.
• The European Court of Justice on when a plane arrives.
• The Liverpool case Allen v Jet2.com refusing leave to delay claims.
• Six year delays Goel & Trivedi v Ryanair  

Don't let attempts to circumvent the court rulings put you off. The more difficulties airlines put in the way the fewer people will have the determination to pursue the case and get compensation. So make sure you pursue your claim and go to court if need be.

If an airline offers to pay the compensation in vouchers instead of money you are entitled to refuse and demand money.

The CAA has useful information on its website about flight delays and cancellations and makes it clear that strikes among the airline's staff are not an extraordinary circumstance. 

If you are delayed the airline is obliged to explain your rights at the time of the delay. In the past many have not and on 21 March 2015 the Civil Aviation Authority took action against Are Lingus and Wizz Air to force them to obey this part of the Directive.

Write to the airline to make the claim. State that you are claiming for delay or cancellation under Regulation EC 261/2004 which is now part of UK law as amended. Don’t worry if you no longer have boarding passes or ticket details. As long as you can identify which flight you were on the airline will have your details on its manifest. If any airline refuses a claim you may have to go to court to enforce your rights. You can do that in a court in the country where (a) the flight landed or (b) the flight started within the EU or (c) the airline is based.

In Scotland claims have to be made through the Sheriff Court - click here to learn more.

In Northern Ireland use www.nidirect.gov.uk

Be determined

Expect some airlines to be difficult and try to put you off or delay matters. If the airline sends you a document headed Draft list of extraordinary circumstances following the National Enforcement Bodies (NEB) meeting on 12 April 2013 write back to say that list has no legal status, has been overtaken in England and Wales by the Appeal Court and Supreme Court rulings, and that you are relying on the law as set out in Regulation EC 261/2004 as amended in UK law. 

Ryanair has refused to pay claims where the flight originated in Edinburgh as it is outside the jurisdiction of the Supreme Court. Ryanair also resists claims in some other circumstances. On 18 September 2015 the Civil Aviation Authority began enforcement action against Ryanair.

Get help

A new online claiming tool has been launched by Resolver. It makes no charge for its service. Never use a claim management company. It will take 40% of your compensation and may or may not be good at the job.

The consumer organisation Which? also has a useful guide to claiming compensation yourself.

You can get some advice free from the Civil Aviation Authority at www.caa.co.uk. If an airline has refused your claim the CAA offers an arbitration service. Its decision is not binding on the airline - though they usually follow it - and there have been long delays in the past as the CAA had inadequate staff numbers to handle the volume of cases. 

If you feel you need professional help you can use the lawyer Bott & Co which specialises in compensation for flight delays. It has an online checker to see if you have a claim or not. If it takes a case then it charges 25% plus VAT (so 30%) of any compensation obtained plus a £25 administration fee (including VAT) per passenger. Altogether that will be more than a third of your compensation. There is no charge if you lose.

Originally made 25 July 2018

vs. 4.00

18354

WHY YOUR GAS BILL IS WRONG

Domestic gas users are being overcharged by an average of £46 a year. That is the claim by an energy firm Canetis Technologies.

More than 20 million households use mains piped gas to provide hot water and central heating and often to cook their dinner too.

The way gas is charged for is an approximation. Canetis has calculated that three errors in these approximations leads to us being overcharged by an average of £46 a year.

Origin
Gas comes into the country from the North Sea, from Europe, and by tanker mainly from the middle east. It then passes through 190,000 miles of pipes and ends up flowing into what is usually a rather primitive meter in our home.

That meter measures the volume of gas passing through it. Traditional meters use a pair of bellows to measure the gas flow. The bellows then push a plastic clockwork mechanism to convert that flow into a numerical display which records either cubic metres (cu.m) or, in older and often greyer meters, cubic feet.

Formula
That volume then has to be converted into the kilowatt-hours units which energy firms charge us for. The formula used to make that conversion will be somewhere on your gas bill and should look like this:

Units used x the calorific value of the gas x a volume correction of 1.02264 divided by 3.6.

Definitions
1. Units used is the volume of gas recorded by the gas meter in cubic metres or cubic feet.

2. The calorific value of the gas is the amount of energy stored in the molecules of the gas.

3. The volume correction takes account of the average pressure and temperature of Great Britain which is different from the standard used to work out the calorific value of a cubic metre of gas.

The same amount of gas – the same number of molecules which store the energy which is released when it burns – will not fill a constant volume. As the pressure rises the molecules are squeezed together and the volume falls. As the temperature rises the molecules get more excited and the volume increases. That means the same volume of gas at different temperatures and pressures will give different amounts of energy when burned.

When the energy stored in a volume of gas is calculated the international standard is to use a temperature of 15C and atmospheric pressure at sea level of 1013.25 millibars (mb).

This correction adjusts that calorific value to take account of the temperature and pressure of Great Britain.

Each of these three parts of the formula is subject to error. The final part is not.

4. Divided by 3.6. Calorific value is measured in MegaJoules per cubic metre. A MegaJoule (MJ) is a million Watts per second. So to convert a MegaJoule (MJ) to a kiloWatt-hour (kWh) you multiply by 1000 and then divide by the number of seconds in an hour. So 1000/3600 = divide by 3.6. That is the one accurate number in the formula!

Errors

1. Units used
The energy technology firm Canetis claims that old style meters systematically overstate the volume of the gas passing through them. They are tested over a wide rage of gas flows. Low flows overstate the volume; higher flows underestimate it. But the meters are limited in the flow they are allowed to use and modern gas appliances tend to use lower flows anyway. The result is that the actual flows are always in the lower part of the range where the volume is systematically overstated.

2. Calorific value
The calorific value of natural gas varies depending on its exact composition - different sources have different mixtures of gases. It will be between 37.5 and 43.0 MJ per cubic metre.

Great Britain is divided into seven regions reflecting where the gas arrives. The calorific value of the gas in those regions is measured every day. The value on your bill is the average of those daily amounts in your area over the days the bill covers . It will therefore be approximate but the hope is that the over- and under-estimates will average out to zero.

3. Volume correction
In 1996 the Government decided that the international standard temperature of 15C and pressure of 1013.25mb for measuring the energy in a volume of gas were not correct for Great Britain. The average temperature in GB was lower at 12.2C. So the measured volume at that temperature was lower than it should be. And despite the UK being at an average height of 66m above sea level, when the pressure inside the meter was added it came to 1026mb, which is higher than the standard. So again the measured volume is lower than it should be.

As both errors lower the volume, the measured volume was multiplied by 1.02264 to correct it. This amount is set down in law.

Canetis and other engineers claim the assumptions behind the volume correction are wrong.

Pressure: recently analysed postcode data from the Office for National Statistics shows that GB homes are on average slightly higher than 66m above sea level, and the meters are normally above floor level. So the pressure is lower at the meter and the volume of gas greater than the regulations assume.

Temperature: the actual ambient temperature over the year is around 12C but most meters are located indoors in heated rooms so gas enters the meter at a warmer temperature than outside, again raising the volume.

So the volume correction is simply wrong.

Overcharge

The result is that these three errors

• meters which overstate the volume flowing through 
• higher temperature at the meter than allowed for
• lower atmospheric pressure at the meter than allowed for 

all create an over estimate of the volume of the gas passing through the meter for the standard energy contained in it. So charging by volume overcharges us for the energy stored. Canetis claims the average overcharge in England is £46 a year.

Action

Under the rules governing gas nothing can be done about any of these factors. They are all set in various laws and standards. 

All customers can do is try to ensure that their gas meter is as low and cool as possible rather than high up in a heated room. 

vs. 1.01

16 May 2018

OXFORD UNIVERSITY TO ABOLISH STUDENT FEES

One of Britain's top universities is to abolish student fees after the Supreme Court allowed it to charge a royalty on every use of English words online.

From 6 April 2018 Oxford University will use a monopoly granted by Henry VIII to demand money from the one billion people who write online in English. They will automatically be billed a ‘nanocharge’ of 0.0001p by Oxford University Press for every word they publish online if it is in the Oxford English Dictionary. Fees from the estimated fifty trillion English words written online each year will allow the university to make education free at all levels.

The Oxford English Dictionary itself only began in 1859 and rapidly became the definitive record of the language. 

But under Letters Patent of 1523 Henry VIII granted the University “our speciall lycence” to collect money “from thoos persons who prynt in the language of Englonde” and use such money “for the supporting and maynteynyng of the vnyuersite of Oxenford” and the order “shulde passe and be sealed vnder our greate Seale as by our said comaundement as ye haue more parfite knaulage of the language of Englonde than any other”.

Henry VIII Letters Patent of 1523 granting Oxford University rights to all English words ‘in perpetuity’. 

The royalty could have been charged at any time since 1523. But early attempts to levy printer’s type led to riots against the so-called “taxes on knowledge”. The situation changed this week when the Supreme Court held unanimously that the words of the Letters Patent could not be clearer” and gave Oxford the right “in perpetuyte” to the copyright on the words in its Dictionary. The court rejected a counter-claim by rival publisher Collins that the Letters Patent were repealed by the Monopolies Act 1624. “No such provision exists in the Statute” said the President of the Court and Oxford graduate Lord Justice Neuberger. Significantly, Justice Lady Hale, the Deputy President who went to Cambridge, did not dissent.

Professor Fiona Nomura, a Proctor of Oxford University Council, told me in an exclusive interview

“For nearly half a millennium Oxford has allowed England, Britain and the world to use the English language free of charge. However, the University is increasingly uncomfortable at Government demands to raise the fees charged to our undergraduates, this year to £9,250. So Congregation decided to use this ancient right to levy a charge on every online use of the words which are the University's copyright and make education at this world beating institution free again.”

She pointed out that Henry VIII himself was a great patron of education and founded several grammar schools and colleges.

Oxford claims the amount “will be too little for an individual to notice but will mean much to our students”.

All words published online will be compared with the online Dictionary and an automatic PayPal debit applied for each word in it. The nanocharge of 0.0001p levied on the estimated 500 trillion online uses of English words each year will raise £500m – more than enough to replace the £110m in fees paid by Oxford’s 12,000 undergraduates. The balance will be used for bursaries and to support its 11,000 postgraduates – who Congregation called “the entrepreneurs of tomorrow” in the so far secret meeting that made this historic decision.

However, Professor Angie Buff of Trinity College Cambridge said the move was a backward step. “It will lead to people misspelling and making up words to try to avoid the nanocharge. They may even start tweeting in foreign languages. It may help a few Oxford students but it will damage literacy and, ultimately, English itself.”

The levy will cover all websites and social media including blogs, Twitter, Facebook, LinkedIn, and even the subtitles on YouTube. Twitter alone publishes 3 trillion English words every year. Oxford is working with GCHQ to extend the nanocharge to encrypted services such as SnapChat.

Professor Nomura confirmed that the copyright only extends to the 600,000 words defined in the Oxford English Dictionary. “Neologisms such as ‘selfiecide’, ‘mansplaining’, and ‘nmh’ will still be free to use, should any ignoramus wish to do so.”

She warned however that the fee would be levied on one new word. At an emergency meeting of the Words Admission National Council English Register this week ‘Brexit’ was added to the Dictionary with immediate effect. Such speed is unusual for an organisation which took twenty-four years to admit the word ‘snozzle’. Professor Nomura denies the haste was to cash in on the word’s popularity. "It is simply because the definition is so clear" she said "Brexit means Brexit," Fi Nomura smiled, “end of."

UPDATE: I have learned that the nanocharge will be brought forward five days and will be applied from 0001 on Sunday 1 April.

Vs 2.0001

1 April 2018

CREDIT CARD FEES BANNED

From 13 January 2018 charging customers more if they pay by personal credit card is banned.

Before the ban people paying for goods or services online were often made to pay an extra fee if they chose to pay by credit card. These surcharges were typically 2% but could be as high as 5% of the price and often were not made clear until the very last moment.

Firms made excessive charges despite a cut in the fees which credit card providers charged them and in defiance of a law passed in 2013 which stated a surcharge could only reflect the actual cost of accepting a credit card payment,

So from Saturday 13 January 2018 such charges are banned completely. And not only for credit cards - the ban extends to any plastic payment and to PayPal, ApplePay and other electronic payment systems.

Enforcement
The law is clear but unfortunately how it will be enforced is not. Enforcement is principally in the hands of the local Trading Standards office. But the Trading Standards Institute has told Radio 4's Money Box programme that it is unlikely to be a priority.

"With no extra funding, budgets cut by over 56% within a decade and 250+ pieces of legislation to enforce and consider – it is unlikely to be a priority for any local TS." 

If a major firm is illegally surcharging people widely over the UK then the Competition & Markets Authority can also intervene.

Self-help

If you are charged extra for using a credit card or any other form of payment then you have the right to demand a refund yourself.

You could email the Chief Executive of the firm something like this

"When I bought XXXX from you on <date> you applied a surcharge of x% to the price because I paid by credit card.

I am writing to you for a refund of that surcharge under Regulation 10 of the Consumer Rights (Payment Surcharges) Regulations 2012.

Since 13 January 2018 such surcharges are illegal under Regulation 6A(1) of the Consumer Rights (Payment Surcharges) Regulations 2012, as amended by paragraph 12 of Schedule 8 to the Payment Services Regulations 2017.

I look forward to hearing from you. Should you not pay the refund within 14 days I shall pursue my case through the Alternative Dispute Resolution process or take action in the courts."

Find the CEO's email here.

Report them
You should also report the matter to trading standards. The way to do that is through the Citizens Advice Consumer Service on 03454 04 05 06. If Trading Standards get enough complaints about a particular firm it may take action. If the trader is based outside the UK but in the EU or Iceland, Norway, or Liechtenstein then the case will be passed to the UK European Consumer Centre. You can call them direct on 01268 88 66 90.

What firms might do
Firms can work round the new law in several ways.

• Refuse all credit card payments - this is the line that HMRC has taken. From 13 January 2018 you cannot pay your tax by credit card. The new law will not prevent a firm from setting a lower or upper limit for accepting credit card payment. 
• Impose one charge for any means of payment - even if you turn up with cash. As long as the charge is the same regardless of how you pay that is lawful.
• Put up prices generally to cover the extra cost. 

Exemptions
The ban applies to any retail payments when both parties are located anywhere in the European Union or in Iceland, Norway, and Liechtenstein. So it would not normally apply if you bought tickets online directly from an American airline.

The ban applies to any charge made from 13 January. But a charge made after that date under a contract entered into before 18 July 2017 is allowed.

It does not apply to goods or services bought using a corporate credit card. But even then the surcharge cannot exceed the actual cost to the company of that means of paying.

Further information
This Government guidance is useful for detail.

The Regulations implementing this law were made as a result of the EU Payment Services Directive 2015/2366.

Paul Lewis
version 1.02
13 January 2018