North Yorkshire Moors Railway General Discussion

And that is precisely where I think your interpretation is “extremely courageous”. It flies in the face of both common practice and explicit instruction, and lacks any direct statutory authority.

It might be a just interpretation, but it is far from clear that it is a legal interpretation.

 

To expand on that the sequence is consumers pay for admission and confirm they want the payment to be treated as donation for Gift Aid purposes. Something then goes seriously wrong with the service entitling purchaser of the service to compensation or refunds. If the purchaser claims that successfully the Gift Aid donation is treated as normal payment and no Gift Aid recovery is sought. If everything’s fine the deemed donation is accepted and Gift Aid is recovered.

 

And that is where I think the law says different. The donation is made, and complete, at the point of payment. The money has transferred, and is in the possession of the charity, so is subject to the stipulations of charity law on the return of donations.

For the sequence you posit to work in the context of charity law, the money could not be paid over to the charity at the point of payment. It would have to be paid into some intermediate account (presumably a form of escrow) and then only paid over to the charity after it was certain that no claim could exist. Gift Aid could then follow.

That would have obvious and significant consequences for the charity, in particular delaying the recognition of income and the availability of working capital.

The mistake that has been made, by me as well as others, has been the focus on Gift Aid. The real killer here is charity law, which is invoked because of the classification of the payment as a donation. Regardless of the substance of the transaction, the law declares this to be a donation and that completely changes the consequences.

 

I cannot see how if it is a donation there is a contract, that is contrary to all other situations. So I submit to you that the logic is this:

A service is offered at a price. An invitation to alter that to a donation is offered. The individual chooses. If they choose the former then they become a contracted customer. If the latter then they have made a donation and the provision of the service (or entrance) is an appreciation for the donation, but no contract can exist because that was a donation.

Unless the above is true, then no amount of dancing on the head of a pin will close the anomaly between the operation of charity law and the consumer legislation, and furthermore if the above is accepted then the position of HMRC becomes entirely consistent.

So I think both the way the NYMR is treating gift aid and the T and C a need amending. Once a donation is made you may not refund any portion thereof. You could offer an alternative thank you I’m a number of forms, but I would suggest the delay repay formula is a flawed method. If a contract is made (ie the fare is not converted to donation) then there may be some recourse to the customer under the consult legislation, but that doesn’t mandate delay repay which as I suggested before is complex and undesirable for a heritage railway.

 

Furthermore the offer of a voucher as a thank you is I think a flawed piece of pricing and it will be interesting to see how it is received. I am not sure that it is necessary and I am dubious about its legal status since donations are supposed to be freely given. I understand why it appears attractive as a “thank you” that cost less than the face price and will often go unused, but I can think of a few alternatives that would be easier to communicate for one thing.

Actually communicating the offer(s) does seem from the website to be something that is quite challenging. The T and Cs are contradictory and unclear too. If it were me I would be concerned by this. Inability to communicate a customer offer clearly is often a sign the offer is fundamentally flawed.

 

My own feeling is that the fact that the payment is a donation does change its status.

But even if I am wrong: every other organisation I have looked at seems to have arrived at the same conclusion that refunds cannot be made. So why is the NYMR alone in its interpretation of the intersection between three disparate bits of law requires it to make provision for refunds, when every comparable peer organisation seems to have reached a different conclusion?

Tom

 

I think that is untenable under Charity law, unless you are making the initial payment into some third-party organisation, which then later (after successful delivery of the service) reimburses the charity. And then at that point, I'd suggest the initial payment wasn't in fact a donation and can't have the Gift Aid attached ...

I just can't see that you can have it both ways: there is either a contract for a service delivered in exchange for a payment, or there is a donation made which can attract Gift Aid. But you can't have a donation in return for a service: it ceases to be a donation.

Tom

 

If that interpretation were to be correct then donors have no right to expect let alone require that having paid for admission to view the work of the charity they would actually be admitted.

 

That may well be true - though I suspect that the continued ability of the charity to solicit future donations might be in doubt if they went down that route and it became widely known, so I’d suggest it is largely a theoretical rather than a practical consideration!

Tom

 

But aren’t you inviting a whole load of extra admin in the case of refunds negating Gift Aid?

 

Presumably the reason why refunding donations is not permitted by the applicable law is to prevent round-tripping and generating bogus tax benefits, not I suspect to prevent a refund per se, as consumer legislation bends over backwards to protect the consumer. One reads of course about charities returning donations to individuals who are subsequently considered to be beyond the pale in terms of their views /politics etc which raises a question as to how such a "refund" is characterised. From the thrust of the discussions on here, a "refund" by the NYMR would effectively be liquidated damages which seems to me could be viewed as a separate transaction from a refund of the donation (cash being fungible of course).

 

Is this made clear to the donor at the point of handing over their money?
If it is, I think that would be a very complex explanation and reasoning, that is likely to dissuade most people from donating, rather than purchasing a straightforward ticket to ride.
If it is not, I suspect the railway could be in trouble with various agencies for misleading customers.

 

That might work, if consumer law applies to the exchange of donation and ticket, and if the T&Cs were framed in a way that made it unambiguously clear that this is a form of liquidated damage. Clauses 9.2 and 9.3 do not include any such provision, and are described as "refund" (9.2) and "compensation" (9.3), with no mention of terms like "sole remedy".

However, we come back to the fundamental issue of the intersection of four distinct areas of law - consumer law, contract law, charity law and tax law. Given the framing of both Gift Aid regulations and charity law in general, it would be a bolder person than I that would be willing to assert, backed by my charity's income, that the Consumer Rights Act 2015 overrides other primary legislation despite making no claim to do so and there being no evidence that Parliament considered the issue.

I really hope that an experienced specialist in charity law has worked with a separate experienced specialist in consumer law to review these terms, as my fear is that they are both contrary to charity law and would be ineffective against a claim for compensation in excess of that tabulated (though I suspect the reference to "indirect or consequential loss" in 13.2 is intended to cover this point).

 

I
I am not sure if you are considering the principles or just the T&C as is. Presumably it is relatively easy to alter the T&C. It would be interesting to hear @Lineisclear 's thoughts. I suspect there are some wrinkles whichever way you go but it seems unnecessary to rub the Revenue's nose in it by calling it a refund.

 

I'm considering the principles, and how they're then written down in something clear and workable that is also legally tight.

I still have concerns that, because this conversation comes out of the treatment of Gift Aid, the focus is on HMRC - to me, the point that needs real care is the question of charity law, and what is or is not permissible. And there (as, actually, with CRA2015), my feeling is that the letter of the law overrides its spirit or presumed intent.

Fascinating as it might be to read a High Court judgement on a test case, I would not wish to put NYMR or its trustees through the pain and cost of litigation. Reading the latest Private Eye, I see that a dispute over the management and control of a small wood near Bradford-on-Avon with a value of ~£45k has cost over £600k in legal fees, not to mention huge emotional cost to all involved.

 

Perhaps the situation will be clarified by the adjustments to Gift Aid rules made necessary by the Digital Markets Competition and Consumers Act. That gives a statutory right to a 14 day cooling off period for automatic membership renewals including Gift Aided ones. If the member decides to cancel the “ Donation” will have to be refunded in full.
Watch this space!

 

Looking at them again I see the T & C's are headed "2024 Season General T&Cs"
Not sure where that leaves any passenger at the moment. Do these roll o0ver until replaced, although the wording around annual pass I guess is set more to last years version than the 2025 one?
9.7 Any refund requested will void your Unlimited Annual Pass return visit voucher. Are passengers supposed to be so knowledgeable as to why this is the case? Some explanation may be nice.

 

The T&C’s for 2025 will be amended.

 

That’s correct. They don’t.but as has been said, you’d possibly not do that often.

 

I would suggest that this is an entirely different situation to the travel situation, and unlikely to yield much clarification. I would further suggest that it might lead to the situation where the membership fee is classified as a donation (or perhaps only those so classified) in order to qualify for gift aid. That would be a neater solution perhaps?