Success on packaged account but charged tax

McXtravert

Hi,

Following the advice on this forum I've been successful on 2 of my 3 historic packaged account claims for mis-selling. About £400 returned which is great news!

However, the amount could have been more but RBS have deducted tax! Is this normal?

Interestingly, on the account they rejected the sign-up was done online (it was about 2010 and too long ago for my memory) as I upgraded from my student account. I wouldn't knowingly have signed up a fee paying account given the option of a free account at that stage in my life with money so tight. Any advice on that also?

Thanks guys.

[Deleted User]

McXtravert wrote: »

However, the amount could have been more but RBS have deducted tax! Is this normal?

Tax goes to the government, not the Bank, so how could it be "more"?

McXtravert wrote: »

Interestingly, on the account they rejected the sign-up was done online (it was about 2010 and too long ago for my memory) as I upgraded from my student account. I wouldn't knowingly have signed up a fee paying account given the option of a free account at that stage in my life with money so tight. Any advice on that also?

What "advice" do you want?

The Bank have rejected your complaint because no one sold you the account, if anything you mis-bought it.

You freely admit you can't remember doing it!

dunstonh

I wouldn't knowingly have signed up a fee paying account given the option of a free account at that stage in my life with money so tight. Any advice on that also?

But you did sign up for it and no-one sold it to you. You made the choice.

There is nothing wrong with having a packaged bank account. It is the sale of the account that matters. You were not sold it. You bought it.

McXtravert

Moneyineptitude wrote: »

Tax goes to the government, not the Bank, so how could it be "more"?

Thanks for your response.

The letter from RBS states the tax is deductible from the value of the monies awarded to me - I've been successful with other claims i.e. flights, PPI etc and never had this issue before.

As for your other point about me mis-buying fair enough, but the website couldn't have been that clear as I would have went for the free option at that point in time. Happy to take that one on the chin if need be but would prefer not to if I can.

[Deleted User]

McXtravert wrote: »

I've been successful with other claims i.e. flights, PPI etc and never had this issue before.

In the past, it was left to the complainant to pay the taxes themselves. Nowadays, the tax is deducted at source.

So you still owe tax from your previous PPI complaints, but I doubt anyone will be chasing you for it..

dunstonh

The letter from RBS states the tax is deductible from the value of the monies awarded to me - I've been successful with other claims i.e. flights, PPI etc and never had this issue before.

The refund has no tax applied to it. It is only the added interest that is taxed. If previous refunds had no interest added then no tax would be deducted.

[Deleted User]

dunstonh wrote: »

If previous refunds had no interest added then no tax would be deducted.

Why would previous PPI refunds not have the statutory 8% simple interest applied to them?

As you know, in former years the Banks normally didn't deduct the tax (although some did) and the uphold letter would simply explain about tax liability. More recently, the tax has been deducted at source for all successful complaints.

dunstonh

Why would previous PPI refunds not have the statutory 8% simple interest applied to them?

The OP says flight refunds. No reason for those to have interest. Plus, very early PPI payouts often only refunded and didnt add interest or could have predated the automatic deduction of tax which the OP should have declared to HMRC.

[Deleted User]

dunstonh wrote: »

could have predated the automatic deduction of tax which the OP should have declared to HMRC.

...which is what I said

(I take your point about Flight Refunds)

Mersey_2

McXtravert wrote: »

However, the amount could have been more but RBS have deducted tax! Is this normal?

I wouldn't knowingly have signed up a fee paying account given the option of a free account at that stage in my life with money so tight. Any advice on that also?

Thanks guys.

Tax isn't 'owed' on most redress - as some seem to think - as it just that and not profit.


However, the 8% pa statutory interest is taxed at source, but you can reclaim this from HMRC if you earn below the personal allowance for income tax in 2016/17.


On your main point - you could appeal the decision by way of referring it to the Ombudsman (FOS). You can do this via the FOS online or over the 'phone.


An online mis-sale is more difficult to argue, as others have suggested - although a law student did win on this point the other day, as he argued the Terms & Conditions were not readily available and explained to him.

[Deleted User]

Mersey wrote: »

Tax isn't 'owed' on most redress - as some seem to think - as it just that and not profit.

Clearly, it is "owed" if the customer is liable for tax.

I accept it can reclaimed if the customer does not pay tax or remains under their tax-free allowance. Perhaps I should have added that caveat earlier..

I would also be most surprised if the OP declared earlier PPI redress to HMRC and, as such, probably still owes the tax from that.