smile

CopperPlate_2

Now those of you who have read my other posts will know that I am an ardent fan of smile. They have good customer service and a decentish website. Their offerings are not always up there with the best, but I've been happy with them on and off for a good few years now.

Recently, however, they've started to make me think about them differently. They've left their savings accounts stuck at the current rate despite a BoE hike of 0.25%, and it took them a little longer than some to put up their not-so-competitive ISA rate.

However, it's their customer service that's got me this time. I had a poor experience a year or so ago when I phoned once, but that's about it until now. I'm finding my messages getting half-answered - as in out of two questions, only one gets answered (shades of cahoot).

I have a mini cash ISA with another provider which I intended to transfer to smile. I opened the smile ISA and contributed £1 to get it open and to get the account details or they'd shut it within 14 days I was told. I sent the Transfer forms off to the other provider and thought, right that'll take a while to get organised. After a month I thought, surely the transfer is in process, so I'll contribute to my smile ISA as it could only be a matter of time before the transfer goes through and smile then becomes my 06/07 ISA and the old one with the other provider is closed.

The transfer has never gone through and the paperwork has gone astray. So NOW I've contributed to two ISA's. Accordingly I withdrew the smile funds I had paid in and paid them across to the ISA still with my other provider (everyone still with me on this). Thinking I could just close the account with smile or have it voided, I made this request. According to smile I have committed a Cardinal sin. They are asking me to call HMRC and lay bare my soul, throw myself at their mercy and declare that I've contributed to two ISA's in the same tax year. I embellish it slightly.

The interest accured over the last 3 months on the balance will be about £20 AT THE MOST. Probably much less, around £15 or so.

Now I know that I was far too hasty in contributing, but I had money to save and thought there was little point in sending it my old ISA as at any given time it could be somewhere between there and here and the cash rejected, etc so thought it would be easier to contribute to the new smile one since (I hoped anyway) it would soon be my current year ISA.

Anyway, the whole point of this is the way smile are dealing with it. I don't expect them to hold my hand - far from it - I am happy for them to apply any interest with tax deducted and then close the account, but this doesn't seem to be an option.

I'm tempted just to leave it until the tax year ends and then make another request to close it. For all the sums involved it's hardly worth it, but their attitude via secure message is fairly intransigent and that's what is annoying me more than anything else. They are in danger of pushing an already wavering customer off to someone else that can actually answer a question fully.

Perhaps it's me not fully understanding the ISA system - but I was trying to be honest and had I just lied and said "No I've not contributed to another ISA this year" they (smile anyway) would be none the wiser. Lesson learned I think.

Anyway, this is war and peace so if anyone has made it this far, thanks for persevering.

Mr_Mumble

Hi CopperPlate, can you clarify something for me? Did you deposit money into your other cash-ISA account between April 6th 2006 and when you opened the Smile account with £1?

If the Smile ISA is the second cash-ISA you deposited money into this tax year you should inform HMRC and Smile should give you the proceeds in the account net of the tax owed. No need to wait until the end of the tax year.

Smile should never have asked for that £1. On Smile's website there is no mention of this, indeed it says you can transfer and then pay in £3,000, not £2,999! The website also states it may take 30 days (under ISA rules) to transfer funds from the old provider to the new so they shouldn't be doing anything after 14 days.

Since the transfer took longer than 30 days shouldn't you be asking someone, Smile or old provider, for some kind of compensation?

You seem to have been far too loyal to a bank, big mistake!

isasmurf

You shouldn't worry about this.

Smile are not being difficult they are operating within the rules. Banks are specifically told not to void ISAs where they learn it is invalid, but to tell the saver to contact HMRC. If you have withdrawn the money then that was a mistake without contacting HMRC first. HMRC have the ability to tell the bank to repair the invalid deposits under certain circumstances. Unfortunately, even if you have withdrawn the invalid deposits they will still be reported to HMRC at the end of the tax year and count towards your annual limit.

I understand that HMRC have recently revised their compliance procedures and as I understand them as long as it is your first "offence" and you don't fall foul of the rules again all you will get is a letter reminding you of the rules and no further action will be taken.

The moral of the story, as you have learnt, is always wait until the current year ISA has been transferred before making any deposits into the new ISA.

CopperPlate_2

Thanks for the messages. I had taken out my 2005/06 ISA with another provider and contributed to it. I then tried to transfer it to smile and incorrectly thought I could start contributing to smile as the transfer process, previously, hadn't taken long and smile would be my new ISA for 05/06. Obviously I was wrong. I understand that it was incorrect, but smile seem to be making such a meal of it. I'm being told by some reps to repay the money from the other ISA and then smile will instigate the formal transfer process; others are saying to contact HMRC and they will decide which is the 'current year' ISA and which should be taxed. As I said the interest is going to be less than £20 gross, so I'm really wondering whether I'll bother. If the Revenue catch up with it then I'll gladly hand over the cash, but this is far too much hassle and it has really put me off smile. I can't seem to get a straight, consistent answer from them and I only sent the one message asking them to close the account!

jamesd

The second one opened in the year is normally the one to be voided and made not tax free, that would be the smile account with just 1 deposited in it and presumably no interest. Further, current enforcement policy is effectively "we don't care" so long as the total contributed to all cash ISAs in one year doesn't exceed the 3000 limit.

The HMRC ISA helpline is on 0845 604 1701 (Monday -Thursday 8.30-5.00, Friday 8.30-4.30). Those are the people who can give you a definitive answer. If you have details of both ISAs when you call they should clear things up, it's part of their normal work.

CopperPlate_2

Thanks for your advice. I phoned HMRC today and as expected their attitude was - not an issue for us as you've not contributed the full £3k yet. They weren't going to write to any of the banks to instruct them or advise them, however, when I contacted smile I was told that there was nothing they could do until the Revenue wrote to them. I told them this wasn't going to happen and I was told the account would remain open, with a zero balance, until April when they did their annual return to HMRC and thereafter the Revenue would instruct one of the ISA's be taxed. What a lot of rot. If the tax people aren't worried about this, why the hell are smile getting their proverbial knickers in a twist about it. HMRC also said that what I'd been told to do by smile - of various contrived methods to rectify the problem - was wrong. Just goes to show that you can't trust a word these banks tell you.

Really hacked off with the way I've been handled by smile so it's off somewhere else for me now.

jamesd

Well, at least HMRC have confirmed that you are fine. So long as you don't want to contribute more than 3000 in total this tax yer, counting the money deposited in smile then withdrawn from them and deposited to the other place twice, once for each deposit, then you at least haven't suffered any loss of your ISA allowance.

CopperPlate_2

No, no loss of allowance suffered, but it's the pigs breakfast that could've resulted had I followed the myriad of conflicting advice I was given/told by smile that has got me so wound up. Yeah, it was my fault to an extent that I contributed tw...I'm going to stop right there and get over this. Not worth bothering about at the end of the day.

Thanks for your help guys/girls. Consider this closed