SIPP Payment error

sheriff111

Hello
My partner attempted to invest a reasonably large amount of money into his ISA but transferred the cash into his SIPP account (Hargreaves Lansdown) in error. He did not invest it in funds - it is sitting there as cash to invest in his SIPP account. He realised what he had done and contacted HL the next day. They have said there is nothing they can do - he cannot transfer it to his ISA account. Is this right? That was way too easy an admin error to make for there not to be any recourse to move the cash out again. Does anyone know the rules on this or have any advice as to how we might be able to move the money to ISAs? many thanks

xylophone

https://www.moneymarketing.co.uk/issues/24-may-2018/claire-trott-can-pension-contributions-paid-in-error-be-refunded/

Accounts error

The only other time a contribution can be refunded is in the case of a “genuine error”. You would have thought this would be quite a wide definition, perhaps covering some of the cases discussed above where a mistake has been made, but this is not so.

Here, we would be looking at a situation where there was no intention to pay the contribution but it happened anyway. For example, if a bank instruction to cancel a direct debit or standing order was not actioned.

https://www.aegon.co.uk/support/faq/pension-technical/Refunding-excess-personal-contributions.html

There are very limited circumstances where personal contributions can be refunded. These are:

where a cancellation notice is returned within the time limit.
where an auto-enrolled worker opts out within the time limit.
as a short service refund lump sum from an occupational pension scheme.
where a genuine error has occurred.
where an individual pays personal contributions that exceed 100% of their relevant UK earnings – this is called a refund of excess contributions lum


I should think that as your husband has an ISA account and a SIPP account with the same company (so that a "slip of the finger" could direct a payment to the wrong account), it might be possible for HL to approach HMRC on your husband's behalf and ask about whether the contribution could be returned.

Brynsam

I'd direct them to HMRC's own tax manual: https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm146600

HL are correct that they can't transfer the cash to his ISA - but they can refund as this is clearly a 'genuine error' and they were promptly notified of the fact and he can then pay to his ISA.

tacpot12

Yes, if he writes to them and says that it was an error as he did not intent to make the payment to the SIPP account, they should be able to reverse the payment.

Before writing he should consider how he was able to make the error and include this information in his letter. There should be a safeguard and, if there was not, it raises questions about HL's systems and processes.

Brynsam

tacpot12 wrote: »

Before writing he should consider how he was able to make the error and include this information in his letter. There should be a safeguard and, if there was not, it raises questions about HL's systems and processes.

He would have needed to hit the wrong key (more than once) and thus sent the cash in the wrong direction. That's his fault - not HL's - so to say 'it raises questions' is unfair.