Can money just disappear without trace between banks?

HeleninDevon

Hi Everyone

HMRC grant lost in transfer to my NatWest Bank Account?!

My first SEISS grant of £3604.00 back in May 20 did not reach my bank account.
Due to me carelessly entering the wrong sort code for that account.
(I have 2 accounts with NatWest, both have different sort codes and I used the wrong one).

I've spent a long time communicating with both parties.

NatWest are adamant the account HMRC transferred it to, does not exist and it would have 'bounced straight back'
to HMRC. They have no record of receiving it, or it being held in any suspense accounts, or any trace of it in the
rejected payments account. They go on to advise, the destination of the payment needs to be initiated by HMRC.

They also verbally said I am not the only one to have entered the wrong sort code and it has easily been retrieved for others.

HMRC have concluded: 'We have been unable to recover the grant payment from the bank
account the payment was sent to. We are sorry we are unable to take any further action'.

My last correspondence from them is dated July 22, responding to my complaint that I was being taxed on the £3604.00 that is 
in dispute, as I have never received it.

Please can anyone advise, do I have to accept my loss or can I still peruse my rights?

Many thanks

TheBanker

If a valid Natwest sort code was used, they would have received the funds irrespective of whether the account number was valid. If the account number was valid the funds would have been credited. If it's not valid, the funds should reject back to the source, however Natwest would have a record of this in their internal systems. It is extremely unlikely that a call centre agent would be able to see this. It is also possible that the funds may have been held on an internal Natwest account for manual investigation, some small banks do this but I would imagine that would be impractical for a bank the size of Natwest. 

But Natwest are right that when a payment is missing, it is the originator of the payment that needs to trace it, via their banker. 

One possibility is that the Natwest account does not exist today, but did exist in May-20 when the erroneous payment was made. The Natwest customer may have decided to steal the erroneously credited funds and close their account. Another possibility is that the Natwest account had previously been switched to another bank, so the credit was automatically forwarded to a different bank via the central switching service. 

Ultimately HMRC sent the payment in line with your instructions, so there's no fault on their part. But they are the only ones who can confirm, via their bankers, what happened next. If your funds have ended up in someone else's account then recovering them will be challenging given the bank will only release their account holder's details if they're compelled to do so by a court order. 

km1500

have you checked the 'bounced straight back' theory by sending a test £1 payment to the wrong account ? Or even just setting up a payee which should fail COP if the account does not exist.

theoretica

I had a case where money was sent and never arrived - turned out the recipient bank needed to be firmly asked to start a search for the money.  In this case this would presumably be whoever HMRC bank with.

Section62

TheBanker said:

It is also possible that the funds may have been held on an internal Natwest account for manual investigation, some small banks do this but I would imagine that would be impractical for a bank the size of Natwest.

LBG have a manual process to return payments sent to accounts where they aren't recognised, so if Lloyds do it then it is more than possible Natwest have a similar arrangement in place.  The Lloyds process, rather than simply sending the money straight back, adopts a somewhat random approach - meaning the return of the money could be delayed some time and appear in an unexpected way.  My experience of Lloyds is generally better than Natwest, so I'd keep all possibilities in mind.

TheBanker said:

But Natwest are right that when a payment is missing, it is the originator of the payment that needs to trace it, via their banker. 

One possibility is that the Natwest account does not exist today, but did exist in May-20 when the erroneous payment was made. The Natwest customer may have decided to steal the erroneously credited funds and close their account. Another possibility is that the Natwest account had previously been switched to another bank, so the credit was automatically forwarded to a different bank via the central switching service. 

If the originator is sure the money was sent to account "A" then isn't it then necessary for the recipient bank to have a look on their systems to see what happened?

The originator's bank won't know whether the recipient account existed at the time in question, nor whether the recipient's customer decided to steal the money, nor whether the account was subsequently closed or switched. So Natwest will need to do some of the heavy lifting here.

If I was in the OP's position I would make a formal complaint to Natwest as a Natwest customer.  At the very least they should be providing better advice/assistance than they appear to have done so far.  I suspect the person who said they can't find the money has only looked in the places they have access to, and the issue needs to be escalated to get a more thorough job done.

[Deleted User]

For missing payments the sending bank needs to initiate a “trace”. The recipient bank won’t do much until that process has been completed. Otherwise they’d always be looking for someone’s “lost money”

p00hsticks

theoretica said:

I had a case where money was sent and never arrived - turned out the recipient bank needed to be firmly asked to start a search for the money.  In this case this would presumably be whoever HMRC bank with.

Just for my understanding - did you really mean to refer to HMRC's bank as the 'recipient' bank.
 
In my eyes, the 'recipient' bank is the one to which the original payment was sent (the OP's Natwest sort code) not the one from which the payment originated (HMRC's bank), even though the latter may have ended up as an inadvertent recipient in turn when the payment was (allegedly) returned to them. 

Section62

[Deleted User] said:

For missing payments the sending bank needs to initiate a “trace”. The recipient bank won’t do much until that process has been completed. Otherwise they’d always be looking for someone’s “lost money”

Has anyone checked whether the type of payment the OP was expecting actually involves a "sending bank"?

HeleninDevon

Heartfelt thanks to all of you who took the time out to reply.

I agree with all of you.

The 'wrong' account may well have been open previously and closed within the few weeks I flagged it up at the bank and tried myself to transfer a £1 to it.

They didn't say it had 'never existed' only 'it doesn't exist' 

What are the chances of someone having the exact same account number that was generated over 13 years ago, with the sort code from the branch 12 miles away, which closed down years ago? Surely NatWest explored that avenue, had the bank account being recently closed or switched to another bank?

I will take your advice and write a formal complaint to them. 

I understand I need to go higher than the 'personal banker' at NatWest Exeter High St Branch. They did respond in writing confirming they 'hold no trace of receiving this payment' after aprox 4 weeks. I haven't responded to them since, which is now 2 years ago.

Should I complain to NatWest for them to liaise with HMRC Banking Section to provide evidence of their 'trace'
Or should I also request HMRC to provide the evidence for me to take to NatWest?

Many thanks.

TheBanker

HeleninDevon said:

Heartfelt thanks to all of you who took the time out to reply.

I agree with all of you.

The 'wrong' account may well have been open previously and closed within the few weeks I flagged it up at the bank and tried myself to transfer a £1 to it.

They didn't say it had 'never existed' only 'it doesn't exist' 

What are the chances of someone having the exact same account number that was generated over 13 years ago, with the sort code from the branch 12 miles away, which closed down years ago? Surely NatWest explored that avenue, had the bank account being recently closed or switched to another bank?

I will take your advice and write a formal complaint to them. 

I understand I need to go higher than the 'personal banker' at NatWest Exeter High St Branch. They did respond in writing confirming they 'hold no trace of receiving this payment' after aprox 4 weeks. I haven't responded to them since, which is now 2 years ago.

Should I complain to NatWest for them to liaise with HMRC Banking Section to provide evidence of their 'trace'
Or should I also request HMRC to provide the evidence for me to take to NatWest?

Many thanks.

It is very possible that your account number exists linked to another sort code. There is a system called modulus checking which can determine whether a sort-code/account number combination is technically valid (not whether it's open, or ever been allocated, just whether the account number could possibly be used). A consequence of this is that each sort code has a set of valid account numbers, and these will be the same for some sort codes. 

Did you make a formal complaint to Natwest at the time, or was it an enquiry? If you make a formal complaint two years ago, and didn't follow it up, you are probably out of time to take the complaint further. 

I think you need to ask HMRC to provide a positive BACS trace which you can then take to Natwest. However given the passage of time I would not be hopeful about locating this money. If it was paid into someone else's account it will be long gone by now. 

If it was paid into the account of an honest person, they would have told Natwest it wasn't theirs and asked for it to be returned to HMRC. It's possible this happened, but HMRC haven't matched the credit to your tax records.

Or it's possible the recipient is a thief who decided to steal your money (but will no doubt claim they were expecting a tax refund therefore believed the HMRC credit to their account was legitimately theirs).

I hope you can resolve this but I think realistically, given the time that's passed since the error, and the fact it was your error rather than HMRC or the bank's, will make it difficult for you to trace this money and even more difficult to recover it if you can trace it. 

TheBanker

NB: I don't know how reliable this is, but you could try putting the details into this site: https://www.sortcodes.co.uk/

It will confirm whether the combination of sort code and account number is valid. As I said in the last post, this doesn't mean that it's open/active/ever been used, just that the combination of digits is valid. Although if you've been able to send a faster payment to the account, it must be a valid combination otherwise the system wouldn't have accepted the FPS request.