One of my ISA providers has misreported to HMRC

MartinSpoon

Just received a letter from HMRC telling me I've deposited too much into my Cash ISA allowance for 11/12. Just thought I'd share my story and see if anyone has any advice, or can get some help from this!

I had an account with Santander, which had £4200 deposited in that financial year. I then transferred to Northern Rock (now Virgin), and added another £600, bringing the 11/12 total to £4800.

The HMRC letter says I deposited £4200 with Santander, and £4800 with Virgin.

I called Virgin, they believe they have reported correctly, £4200 transferred in and £600 deposited. They also said this wasn't the first issue like this they had seen with Santander. I then spoke to Santander and they've had to take the issue away to look at.

Spoke to HMRC (perhaps I should have waited for Santander to get back to me), thankfully the number on this letter is a direct line to an audit department. Helpful chap on the phone suggested I email in some evidence that I made the transfer. I'm normally very good at keeping financial records, but I can't find any evidence of the transfer, just the last statement with Santander before the move to Northern Rock. I can't quite remember, but I think the transfer was arranged entirely online (the northern rock account was online only) which might explain the lack of paper trail. Unfortunately, I can't get anything online from Santander because the account is closed, and the Virgin site shows a 'COUNTER CREDIT' at the start of my account (the amount transferred in) but it's not explicit enough to say it was a transfer.

So .. not sure what to do now, email what little I have to HMRC, or wait and see if Santander sort it out and re-report to HMRC.

HMRC seem to have a policy where the first time you make a mistake in a year, they don't any action, but next time they will, so whilst there is no immediate impact on my savings, I'd obviously rather not have this on my record for the future!

jimjames

"Counter credit" does sound like they may have done it as a cash payment rather than as a transfer which would explain the HMRC reporting. It seems strange though that Virgin have it recorded as a transfer as I would have thought their system is the one sending incorrect info to HMRC. Whatever Santander say now is irrelevant - you DID pay into their ISA, what matters is what Virgin are reporting. If HMRC see it as a new payment into Virgin then it has to be Virgin reporting that to them not Santander.

As far as I can see there is nothing that Santander need to do. They have correctly reported your deposit to HMRC as new money into your ISA and it is Virgin that have incorrectly reported your transfer as new money being added.

innovate

Sounds to me that this never was a proper transfer since up until now, for a transfer you had to fill in a form, sign it and give to your new provider.

If you did it all online, it gets taken as a deposit. This would seem likely to have happened, since your opening deposit shows as a counter credit.

The mistake appears to have been made by you, not one of the providers. If a provider would be to blame it would be NR/Virgin because the receiving provider is responsible for the transfer.

Sounds the HMRC will let you off since you didn't really exceed your allowance, so all's well.

MartinSpoon

Thanks, however, as I said in the original post, when I phoned Virgin they said they have it recorded as a transfer, not a deposit, and they implied that it was their responsibility to declare that to HMRC, not Santander.

ylesia

MartinSpoon wrote: »

Thanks, however, as I said in the original post, when I phoned Virgin they said they have it recorded as a transfer, not a deposit, and they implied that it was their responsibility to declare that to HMRC, not Santander.

Then it is definitely Virgin that have reported incorrectly. I would ask Virgin to send you written proof that it was a transfer in from another provider and then send that on to the HMRC. Nothing to do with Santander anymore.

dunstonh

The rules changed a few years back on reporting to HMRC. So, whilst Virgin are correct now, it may not have been the case then. In cannot recall the point it changed. Also, money deposited in that year is reported. So, if it was a same year transfer rather than a past year transfer, it could happen.

What you have described dosent sound like a transfer (counter credit used instead of transfer). So, that may be part of the error. Did the funds go direct from Santander to Virgin or did you draw them first and pay it to Virgin?

The Virgin application form should have been a transfer application. So, if you can get a copy of that along with a letter saying they received it as a transfer and not new money, you should have your evidence to give HMRC who will just give you back your get out of jail free card.

MartinSpoon

I definitely did not withdraw the funds, it went direct from Santander to Norther Rock. I do remember that it was a two step process to open the Northern Rock account and then complete the transfer in. As I've said, can't find any specific paperwork for that, may well be my fault, but that seems like bad luck on my part, I have financial records quite neatly filed going back 10 years for everything else.

I've asked HMRC if they can clarify who should be reporting what. Depending on what they say, I can go back to Virgin and ask them to give me some evidence (it could be the person I spoke to on the phone at Virgin was wrong).

molerat

Can ISAs be transferred on line ? I was under the impression that it is still stuck in the 20th century with paper authorisations only.

innovate

molerat wrote: »

Can ISAs be transferred on line ? I was under the impression that it is still stuck in the 20th century with paper authorisations only.

You are right, until at least last year this was the case. It should change this year, I think, but all I have seen so far are traditional transfer forms.

MartinSpoon wrote: »

I definitely did not withdraw the funds, it went direct from Santander to Norther Rock. I do remember that it was a two step process to open the Northern Rock account and then complete the transfer in. As I've said, can't find any specific paperwork for that, may well be my fault, but that seems like bad luck on my part, I have financial records quite neatly filed going back 10 years for everything else.

The confusion comes from the word "transfer"

You and I would think that if you move your money from bank A to bank B, that would be a "transfer".

However, if you do this with you ISA money, you have not made a transfer. You have made a withdrawal at bank A, and a new deposit at bank B.

This is what happened in your case, I am 99.99% certain of that.

What you should have done is an ISA transfer. This is very different to the above 'transfer' . As mentioned before, that would have involved you filling in a NR/Virgin transfer form - - a piece of paper that required your physical signature, and would have had to be snail-mailed to NR/Virgin.

The mistake was with yourself, even if you made this mistake inadvertently.

As I said before, from what you reported, HMRC will let you off, so all is well.

Just don't do any future ISA transfers yourself! Ask your new provider to do it.

badger09

I'm with innovate on this one

What puzzles me is that you transferred precisely £4200. If it was a correctly carried out ISA to ISA transfer from Santander to NR/Virgin, I would have expected the accrued interest to have been transferred as well as the sum deposited.

Looks like your error to me

innovate

badger09 wrote: »

I'm with innovate on this one

What puzzles me is that you transferred precisely £4200. If it was a correctly carried out ISA to ISA transfer from Santander to NR/Virgin, I would have expected the accrued interest to have been transferred as well as the sum deposited.

Looks like your error to me

Good point about the interest, hadn't thought of that! So perhaps this should sit in the Santander ISA, although the OP says "I can't get anything online from Santander because the account is closed". So this needs clarifying by the OP and his banks.