Bounce back loan repayment demand

jonesMUFCforever

Mikki4321 said:

I am sorry ,but actually you are allowed to use a current account for your buisness transactions .
  what i should have added was that you are allowed to invest if funds not needed right away,and funds eventually used for the buisness ,which they have been .
i was just staiting that there are no kinds of "investments " that are excluded and being law abiding and sensible, terrorism as a form of investment hadn't entered my head .

Please quote us the term which suggests you are right in that you can conduct your business through a personal account.

Your loan agreement will state that if you close or transfer the business account then the loan becomes payable immediately.
You can argue all you want but TSB are demanding their money back.

Grumpy_chap

Mikki4321 said:

I am sorry ,but actually you are allowed to use a current account for your buisness transactions .

For your information, the TSB Your Personal Banking terms and conditions state "These terms and conditions aren’t for business customers, including clubs, charities, sole traders and partnerships."  Branch staff may have turned a blind eye, but that does not make it the personal account suitable for business use.   There are many benefits to holding a separate business account for your sole-trader activity that more than warrant the low fees that may be charged.

Mikki4321 said:

  what i should have added was that you are allowed to invest if funds not needed right away,and funds eventually used for the buisness ,which they have been .
i was just staiting that there are no kinds of "investments " that are excluded 

The difficulty here is the requirement that the BBLS funds are required to be used to provide an economic benefit to the business. 
That means the current business, not a new business (so a dress-maker, for example, could not use the BBLS to fund the start up of a residential property letting business). 
Similarly, that would exclude "investment" unless the current business operated as an investment business (though most such businesses were specifically excluded from the scheme). 
The business can use the funds to provide "working capital" and it would be entirely reasonable for that sum to be held on deposit in the short term (though there is a point of discussion about which point funds held on deposit remains as "working capital" as, by definition "working capital" comprises funds required to meet short term liquidity).  Notwithstanding that, it would be entirely reasonable if the BBLS was held in a regular business banking deposit account (rather than business current account) in the short term.

Where the OP has slipped up (and been called out by TSB) is using the BBLS funds to purchase a personal "investment" product, namely Premium Bonds, hoping to get the £million instead of the paltry interest that a deposit account would return.  By definition, as a product only available to individuals, this was not a suitable location for the business deposit to be held.  It is highly likely the OP was trying to be "prudent" but in doing so has inadvertently breached the rules of TSB, NS&I Premium Bonds and BBLS.

Has the OP now spent all the BBLS in the course of operating the business? 
I do think the OP's best and simplest route to resolution is to find a way to repay the BBLS funds as swiftly as practical.  The OP should remember that the protections of the CCA do not cover the BBLS.  
Jeremy has set out the options to complain about the BBLS - I very much doubt there is anyone in this forum (or elsewhere) that can provide information about success through the complaints procedure given that there simply is not the experience base at this point in time. 
One caution I would pass about following the complaints route is whether asking TSB to look deeply may result in the OP's affairs being picked apart and the risk of negative outcomes - any kind of "black mark", account closure, or fraud consideration.

Jeremy535897 said:

Prizes on premium bonds are tax free. Premium bonds held in a sole trader business would not qualify for inheritance tax business property relief, which may be what your concern is, but that is not the issue. My arguments would be:

• point 1 is wrong, because the premium bond investment was a temporary holding mechanism only, and the funds were later spent on business items (according to OP)

As I set out above, the appropriate "temporary holding mechanism" would appear to be a business deposit account, not any kind of "personal" account, whether Premium Bonds or otherwise.  For the funds to be held in a specifically designated personal capacity (as Premium Bonds are), this would require the funds to be drawn from the business to later be re-invested in the business.  As a sole trader, there is not simple accounting for this merry-go-round.

Prizes from Premium Bonds are tax free, but that requires that the funds are personal (which these funds were not). 
Had the OP put the BBLS in a suitable business "temporary holding mechanism" then the interest would have been paltry, let's assume £100.  When the accounts are prepared, this £100 would be all rolled up into the sole trader profits and then subject to income tax and Class 2 / 4 NI contributions.
IF the premium bond had declared a win, could be up to £1 million, how does that win value sit?  The win really needs to be accounted as a business asset and would therefore still cascade out as profits subject to taxation when the accounts are prepared.  Would the OP have gladly given nearly half back to Rishi?  I suppose the good part of being in this position is that the OP could have kissed goodbye to TSB and the BBLS, and also paid a good Accountant to wean his way through it.

MattMattMattUK

Mikki4321 said:

I am sorry ,but actually you are allowed to use a current account for your buisness transactions .

It is a specific breach of almost all bank's terms and conditions for personal current accounts, including TSB's personal current accounts. 

Mikki4321 said:

what i should have added was that you are allowed to invest if funds not needed right away,and funds eventually used for the buisness ,which they have been . 

i was just staiting that there are no kinds of "investments " that are excluded and being law abiding and sensible, terrorism as a form of investment hadn't entered my head .

The business would be allowed to invest the funds, Premium Bonds can only be held by a private individual, therefore the investment can not be a business investment.

dunstonh

I am sorry ,but actually you are allowed to use a current account for your buisness transactions .

No you are not.   Historically, banks turned a blind eye to people not using business banking facilities and not using the counter services or having many transactions.  TSB T&C clearly states that you cant use it for business (as do most banks).

By applying for a BBL, you have used business banking facilities.  You also drew their attention to the fact you are using a personal account.    And you closed the business account that the loan would be repaid from.  Then you used the money by buying an asset that can only be used for personal circumstances.   A lot of businesses have taken the BBL and stuck it in the business savings account and that is fine as it is working capital.     Still assuming you are self employed and not a limited company (which you have not clarified), the lines between personal and business are grey but when it comes to premium bonds, it is not.  

You basically waved a red flag at the TSB saying come and look at me because of what you did.

mattyprice4004

No idea where you got the impression you could use a personal account for business, because you can't.

Also, they have demanded payment because you breached the T&Cs - taking out (up to) £50,000 in finance is one of those times you need to grin and bear it when it comes to fine print (ie read it!)

Sorry, but this seems to be self-inflicted on several counts.

Jeremy535897

Perhaps it is worthwhile revisiting the opening post. The facts were stated (temporary investment in premium bonds, closure of business account, although I still don't think we are certain this is a sole trade), and OP asked for advice. I don't see the point of repeatedly trotting out the same old mantra about personal accounts being used for business, or arguing why one temporary holding investment is somehow fatal and another is not. So far as I can see, the only useful advice that can be given is that OP must first decide:

• do I repay? or
• do I fight?

If the latter (and I assume it is, or why raise the question), the advice needed is how. The "how" is to talk to the bank, ask why the business account cannot simply be re-opened, and complain that the bank is negligent in allowing the account to be closed, if that automatically led to the BBL becoming immediately repayable. Follow the bank's complaints procedure, and take it to the Financial Ombudsman if that is unsatisfactory.

Grumpy_chap

Jeremy535897 said:

the only useful advice that can be given is that OP must first decide:

• do I repay? or
• do I fight?

If the latter (and I assume it is, or why raise the question), the advice needed is how. The "how" is to talk to the bank, ask why the business account cannot simply be re-opened, and complain that the bank is negligent in allowing the account to be closed, if that automatically led to the BBL becoming immediately repayable. Follow the bank's complaints procedure, and take it to the Financial Ombudsman if that is unsatisfactory.

I agree they are the only two options the OP has. 
I come down on the other side as the best route if the OP possibly can repay, then repay.

Given the OP has "flexed" the rules of both the bank and the BBLS, raising a complaint (even if "won" or fudge with "no admittance of liability) could be a process of shining a spotlight on the issue and result in some kind of "black mark", further account closure, or fraud consideration.  The long-term impacts of these could be far higher than the short-term pain of having to repay the BBLS and cash-flow limitations.

Of course, none of us know the OP's full financial details and whether repay is an option.

Jeremy535897

Grumpy_chap said:

Jeremy535897 said:

the only useful advice that can be given is that OP must first decide:

• do I repay? or
• do I fight?

If the latter (and I assume it is, or why raise the question), the advice needed is how. The "how" is to talk to the bank, ask why the business account cannot simply be re-opened, and complain that the bank is negligent in allowing the account to be closed, if that automatically led to the BBL becoming immediately repayable. Follow the bank's complaints procedure, and take it to the Financial Ombudsman if that is unsatisfactory.

I agree they are the only two options the OP has. 
I come down on the other side as the best route if the OP possibly can repay, then repay.

Given the OP has "flexed" the rules of both the bank and the BBLS, raising a complaint (even if "won" or fudge with "no admittance of liability) could be a process of shining a spotlight on the issue and result in some kind of "black mark", further account closure, or fraud consideration.  The long-term impacts of these could be far higher than the short-term pain of having to repay the BBLS and cash-flow limitations.

Of course, none of us know the OP's full financial details and whether repay is an option.

I don't think OP would have asked the question if repayment is an easy option, but we don't know for sure. I don't think raising a complaint as opposed to meekly repaying is likely to make it any worse.

Grumpy_chap

If it were me, I'd seek to avoid "head above the parapet".

dunstonh

You have to look at the options the OP has.  Complain and they may get concessions but they may also draw further attention to the breaches and TSB may dig their heels in and remove their personal banking too.   After all, they were told they needed a bank account once but then totally disregarded it and closed it once they had the money.  So, its difficult to argue that they didn't know the couldnt use the personal account.

TSB would have to be particularly arsey about it but they may feel the OP has been arsey about it too.   

I suspect that with a bit of sensible communication, this could easily be resolved.