North Yorkshire Moors Railway General Discussion

A consequence which I cannot believe is not directly intended by HMRC guidance, and where the starting point is that Gift Aid is paid on the value of a donation - so if the donation is only the 10% uplift, Gift Aid is £1 per ticket and not £12.50.

However, that is not actually my primary concern - important as legal compliance is. It is more that a generally benign measure, used by many attractions, is coming to operate in a way that opens up complication upon complication. The classic scenario would be a family party, consisting of grandparents, parents and children. Each household pays their own ticket; the parents are taxpayers with spare on their Gift Aid capacit and can Gift Aid but the grandparents are not eligible (income too low/already giving to their capacity).

There is then a problem with the timetable, and the clauses in the T&Cs about refunds come into play. How does it then work for NYMR, as a responsible and fair organisation, when they say "we are not legally allowed to offer a refund" to the family of 4, but do offer, in the same underlying circumstances, to the grandparents?

At this point, I lean towards the view of others to think that the definition of what is on offer needs to refer to the attraction, and not to the timetable. Given the lack of legal precedent determining an interpretation that the timetable is a material factor in the purchase (see also Mk1s on Jacobite, specific locos on railtours), the approach of defining the contract exclusively of the timetable seems more pragmatic and, critically, less potentially damaging.

 

If you follow the interpretation of CRA 2015 you've argued, you don't go down the Gift Aid route.

Pay more to get a voucher of questionable usefulness, and get reduced rights is not going to sell donation pricing to me, however nicely packaged and leaned towards donations as the "normal" price.

A good while ago, I saw a piece in a railway's journal (I think the GCR but it doesn't really matter) as they worked out a new rule book. What was interesting was how long they spent working through various degraded working scenarios to stress test the rules and make sure they worked.

The outcome of this conversation doesn't give me confidence that this has happened for NYMR.

 

Using the scenario given many pages upthread (in my belief not the case) that people are so familiar with DR on the big railway. It would be nil for Levisham full ticket for Pickering.
Now the issue becomes a rover could be used for multi trips so does that mean that you would prorata the cost of the Whitby Pickering leg, if that is where the train started, or Grosmont Pickering if that is where the pax boarded. Then of course how do you prove how many trips they did or where they actually got on the delayed train.
Big railway has a formula for season tickets and rovers, but it seems from other threads not all TOC's want to follow the same rules.
Whole thing has a great potential for even more confusion.

 

This document published by Visit England provides a concise summation of the rules on gift aid for charitable attractions.

 

Maybe there's light at the end of the tunnel for those hoping for grant funding :

"Struggling English museums get rescue funds" - https://www.bbc.co.uk/news/articles/ckgdwvw392wo

but what will be the price demanded in return?

 

The problem is that your existing Ts&Cs don't properly address that, in that you have created the very real issue that passengers on the same service must be treated differently depending on whether they have a Gift Aid or non-Gift Aid ticket. I wouldn't like to be on the platform at Pickering at 7pm after a late-running service finally gets back and trying to negotiate that one, whether having explicit instructions or not.

Two further points.

One - is it your own Ts&Cs that have created the expectation that compensation is available for late-running services? I would never have previously considered that at a heritage railway, because my expectation of the "service" you are providing is of a visit to an attraction (with a train ride thrown in). Did you let me in? Yes. Did I see the train couple onto the stock? Yes. Did I get my photo stood in front of the loco? Yes. Did I get my ride? Yes. Have you provided the service I expected to get when I visited? Yes you have. OK, we were really late getting back, but fundamentally you delivered what I came for.

This comes back to the question of "what service are you providing?" If the answer to that is "a visit to an attraction" (and that is explicitly what the Gift Aid passenger is getting) then nowhere in that service provision does it say anything about running to a timetable. So why even create the expectation that the timetable is an integral part of the service offering and contract with the visitor?

The second point: what has triggered the railway to go down this path? Is the reason that, relayed by platform staff, the railway is receiving considerable negative passenger feedback about late running? If so, that is a significant issue, but it is also one that I would expect the best response would be "understand the causes and eliminate where possible the reasons for late running" rather than "provide an explicit route for compensating any passenger who complains". In other words, if you have a problem, the best long-term response is always to try to solve the problem (timekeeping) rather than mitigate the impacts (customer complaints).

Tom

 

In fairness, I think @Lineisclear has made the line of thought clear, in terms of a response to the 2015 Act. The issue is that it and HMRC rules on Gift Aid pull in different directions, and (putting it as gently & minimally as possible) it doesn't appear that the tension between these has been fully worked through.

Less gently, I think this points to a major gap at the heart of NYMR strategy, which is that the organisation isn't clear in itself about what it's really trying to do. That's coming through in mixed messages, weak marketing, declining volunteer commitment, and declining passenger numbers. All of that is then in the context of an increasingly challenging general commercial environment.

 

The first part of your post is an accurate assessment. The problem is that the Gift Aid rules have not been properly thought through particularly as regards the statutory right to compensation and refunds. It’s a recognized failing that affects many recipients of Gift Aid. Compliance with the Consumer Rights Act has not been raised by HMRC as a bar to recovery of Gift Aid possibly because if held to be so it would decimate the revenue of many charities.

 

Not the first time of course two pieces of legislation have the opportunity to contradict or you fail one by following the other.
I do not have enough legal training to know how easy, or even possible, it would be to make one the "prime" in this case. But I regularly wrote contracts (with legal consent) that included something along the lines of where this Clause (x) contradicts with clauses (w, y & z) the terms of clause x will apply.
These two may be too enshrined, especially as one involves HMRC.

 

I hesitate to suggest that HMRC have not thought their rules through, and I think that interpretation is both dangerous and unwise.

The concession (and it is a concession) allowing admission to be treated as a donation rests on a very specific set of provisions, which predate CRA 2015. Those conditions include specific rules, applicable to any donation being considered for Gift Aid, that explicitly prohibit refunding the donor.

Unless there is correspondence with suitably senior HMRC personnel clarifying their policy, I would not take HMRC silence as assent.

 

The Gift Aid rules for visits to attractions predate the Consumer Rights Act, so if anything, the “not thought through” bit is the other way round.

But I still think you are making a mountain out of a molehill about consumer rights: if you acknowledge that what you are providing is access to an attraction and not a timetabled transport service, the grounds for not providing that service when a train is late are much weaker.

Tom

 

There seems from some of the posts to be a strange view that Consumer Rights legislation should not apply to heritage railways so they can either ignore it or deny that it does.

There is a conflict for those that are charities and recover Gift Aid but they're in good company with the many other charities where admission to their sites constitutes a service.

Tolerating conflict between Gift Aid conditions and the Consumer Rights Act is similar to acceptance that heritage railways can be charities selling admission to view their work and simultaneously transport providers entitled to exemption from VAT . It's logical nonsense but since when did all law interlock and make sense ?

Tom is right that the best defence against claims for compensation or refunds is to run to time. The argument that issuing a timetable doesn't create expectations about service delivery is extraordinary and undermined by acceptance that, if there are serious delays , good customer service should save the day. Those can occur for reasons beyond the railway's control. The NYMR is particularly exposed to the knock on effect of delays on the national network.

The second line of defence is effective and sympathetic customer service along the lines Tom suggests. Most of the time that will avoid things escalating. However if that fails what's the fall back? The NYMR has taken the view that it doesn't want to distinquish between those passengers who sign up for Gift Aid and those who don't. Both are valued supporters of the railway and both are entitled to have their consumer rights respected.

If both lines of defence have failed the attitude of "We're a heritage railway, we never pay compensation or refunds" ( which still appears in some railway's T and C's) is bound to be ineffective as it's manifestly an unfair contract term. Trying to hold that line is pointless and risks damaging the reputation of the sector. A railways's T &C's don't have to specify the level of compensation payable, or refund due, but if they don't the risk is that those will be set by a third party such as Trading Standards or the Alternative Dispute Resolution entity nominated by the consumer. As 35B pointed out stated levels can have an effect similar to liquidated damages. They can help fend off the imposition of more onerous ones. It's judgement call for railway managememts whether they want to opt for clarity or leave things to chance determination by others.

 

When was the last time the NYMR gave a customer their money back?

 

As long as the record keeping is good enough then my instinct suggests that if someone signs a Gift Aid declaration in the morning, but then the services are delayed and they claim or are given a refund of their £49.50 under the CRA. Simply destroying the Gift Declaration and not claiming from HMRC would be ok.

Where it could get messy is if a Gift Aid claim to HMRC has been made but then the donation is repaid under CRA for a particular individual. But I seem to recall it is possible to make 'earlier year adjustments' in later Gift Aid claims to potentially take care of that.

 

I refer to my earlier comment - I really hope that you have excellent advice behind this stance, and that those advisors have good professional indemnity insurance.

There's no argument that the law can be an ass, and that different pieces of legislation combine in odd ways - you rightly give the example of Gift Aid and VAT rules. The issue lies in two things:
1. Your assumption that this is still a matter of consumer law
2. The presumption that, in the absence of any sign that Parliament intended the 2015 Act to override the taxation rules, it has done so.

HMRC are really clear - converting a purchase of admission into a donation is irrevocable. I am with @Jamessquared in considering that, had Parliament wished* to apply consumer law in this situation, they would have legislated to do so. That they didn't is a demonstration that the 2015 Act does not apply.

The analysis then needs to be robust, and to be guided by principle rather than convenience. At present, a position has been taken over the application of the Consumer Rights Act, and all decisions are being reviewed in the light of that perspective, with what the suspicious minded might see as a very "convenient" interpretation for Gift Aid purposes.

If we look at the alternatives, one would be that HMRC take a robust line and NYMR suffer the consequences of enforcement action. To avoid that, I'd personally go back to the question of how the contract is defined, and therefore where (non-Gift Aided) consumer rights might end up - views represented by people familiar with how other railways have handled this. And if that interpretation is felt untenable despite sectoral standards and no legal precedents to the contrary, I'd want to revisit Gift Aid before being challenged by HMRC.

* - for the avoidance of doubt, I am fully aware of the issues with the quality of legislation, and the lack of effective Parliamentary scrutiny. However strained, that remains the legal convention.

 

Adjustments can be made, but they get heavily checked...

I think the record keeping could be the biggest challenge, tying ticket to transaction and then ensuring that the Gift Aid is not claimed till after the day of use.

 

I'm not sure that the NYMTR currently has a strategy, other than to survive, and I get the impression that it is struggling with that, as well.

 

Is the visitor made aware that by Gift Aiding their purchase, they are forfeiting the right to any refund?
Should there be a box to tick and separate Ts & Cs?

Meanwhile, is the day ticket price too high? Did the more expensive ticket, last year, reduce passengers to Whitby? I saw well filled trains but not the packed and standing that used to be the case.
If 25 people are deterred from travelling each day, that could amount to £260,000 of lost income.
No early train to Whitby on Sundays may have lost the railway 100 passengers each Sunday or £150,000 or more.
I'm pleased two trains operate to Whitby this year.
Pricing is not easy.

 

Just to observe that "survival" is not a strategy, but an objective. I'd expect strategy to be along the lines of "we will run x trains per day on y days per week with average loadings of z%, meaning that we will sell n tickets for an income of £x".

Tactics are then about how those are sold, what proportion comes from Gift Aid, the number of locomotives and carriages in operation, etc.

If these get confused, so will a whole lot else...

 

I suspect that you have the advice from the NYMR's principal advisor in his posts on here!

As to the second comment, I'd add that the law is mostly made by overpaid asses and actually the same overpaid asses are usually lawyers!