How to report a bank for incorrect tax reporting.

Sillychuckie

Hello.
I have complained to a bank, because I have discovered a fairly niche pathway that leads to them misreporting customer tax interest on savings, to HMRC.

I complained to the bank in question, they accepted fault (verbally), and sent me a sum of money which covers my additional (but incorrect) tax liability, so I can then forward it onto HMRC. They were not willing to 'correct' the reported value to HMRC.

However, there must be hundreds of other customers this has happened to (who are possibly unaware, as smaller amounts would just be dealt with via a tax-code change), and will continue to happen to, as it sounds like its quite a difficult thing for them to actually fix.

So my question is simply:
Is the Ombudsman still the right pathway for this sort of complaint, given that they have paid me off to make me good, or is there a reporting/whistleblower mechanism through HMRC?

Thanks. Regards,
SC

friolento

If you have not incurred a financial loss, I doubt the Ombudsman would be very interested, and they would be unlikely to rule in your favour. They also wouldn't tell a bank to change their procedures / policies. 

Please name the bank, and elaborate on how they misreport, so the rest of us can figure out whether we are affected.

Sillychuckie

friolento said:

Please name the bank, and elaborate on how they misreport, so the rest of us can figure out whether we are affected.

Not prepared to do that at this stage. Lets see how the Ombudsman respond.

I have just raised a case with them, so will let you know if they show any interest or not. As I said, it is quite niche. It is unlikely to impact many. I'm not out of pocket. In fact, the amount I was paid off by, was rounded up, so I'm in profit (even after I pay the incorrect tax liability).

The other option I have, is to not declare the interest on my tax return (as I shouldn't need to) - and if HMRC come asking questions as to why I under-declared, I can then lift the lid on everything. BUT - I don't know if I can be bothered with that, and it puts me at risk of HMRC's computers not caring about the detailed nuance that is the crux of my complaint.

If there were an HMRC tool to report on it, I might have referred it to them to get ahead of it.
I will wait for the Ombudsman response, and write to HMRC about it, using this address:

Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom

I will return to this thread if there is relevant info I'm happy to share.

Ayr_Rage

The relevant information is the anomaly that you are currently not sharing.

Please elaborate.

badmemory

Why did you even go to the bank.  Just contact HMRC & tell them the figures are incorrect & prove it to them.  I wonder how many others they have done this to & got away with it.  Why do you think they would want to shut you up.

masonic

I think it contravenes the spirit of this forum to drop such a bombshell and then fail to elaborate on something we will all be keen to check for ourselves. Rather like asking your fellow cruise ship passengers how you release the lifeboat you've just climbed into while refusing to explain why you are abandoning ship.

Sillychuckie said:

The other option I have, is to not declare the interest on my tax return (as I shouldn't need to) - and if HMRC come asking questions as to why I under-declared, I can then lift the lid on everything. BUT - I don't know if I can be bothered with that, and it puts me at risk of HMRC's computers not caring about the detailed nuance that is the crux of my complaint.

I have a very relevant comment related to this, but I'm not prepared to share it at this stage.

eskbanker

Related to this thread perhaps (albeit two years ago)?

https://forums.moneysavingexpert.com/discussion/6456813/query-regarding-zopas-calculation-of-interest-on-savings

masonic

Hmm, well if that's it, then it appears to be an interface issue in that some pennies of interest are not appearing as a quirk of the system. There is no doubt that the OP is entitled to those pennies and has now been given them. So not a HMRC reporting issue.

Kim_13

If this is happening as a matter of course, then surely it’s only a matter of time until their error is such that it pushes someone over a cliff edge - loss of £500 worth of PSA, Winter Fuel Payment, some amount off of their Child Benefit etc. When the loss is greater than just 20%, 40% or 45% tax on an amount of interest that was never received, surely the bank won’t be so keen to pay up, regarding it as not foreseeable.

When changing tax codes, HMRC will assume that an amount of untaxed interest will also be earned again in the next tax year, making it look as though more interest has been reported than is actually the case. But as the bank have accepted fault, that presumably doesn’t account for what happened here.

EthicsGradient

I find it strange that this involves both an apparent knowledge of what was reported by the bank to HMRC (which implies that HMRC worked out the tax for PAYE), and that the thread starter has the option of declaring the interest on their tax return, or not (which implies self-assessment).

I suggest we all ignore this thread till the thread starter feels able to give the required information for anyone to be able to comment in a meaningful way.

Sillychuckie

In response to the last comment...
I closed an account with this bank, and they sent me a "Statement of Closing Interest", which included a figure that they will (future tense) report to HMRC following the end of this tax year (2025-26).
Therefore, the misreporting hasn't actually happened yet. My original post used the term "reported" (past tense) for simplicity sake, but as you have queried it, fair enough. I'll elaborate.

The figure is over £1000 more than the actual interest, and when I higlighted this (with my complaint letter refering to things such as 'cliff edges' as an example of the problems it might cause), they explained that they couldn't do anything about it, even though they have 5 months before the end of the tax year to resolve the problem.
I suggested they:
- Send me a new statement, with the corrected figures
- Not report the figure to HMRC (and confirm that they will not do so).
- Write something that I can use should HMRC ever come knocking, to evidence that the original statement was created in error. (e.g. the replacements).

I simply wanted accurate paperwork. I was not expecting a pay off.

They decided not to do this. Instead, they have said:
- Their systems are too complicated to reverse this. They would need to reopen closed accounts, unwind a mortgage redemption, (which is part of this whole saga, as it relates to an 'offset savings' account), and its all much too difficult and technically time consuming, involving too many departments.
- Similarly, they can't stop the report that will go out to HMRC after April, including these figures. The systems are designed not to be 'fiddled' with.

They said it would be easier for all concerned, if they just paid me the tax liability and rounded up the sum.
Interest overpayment was 1k. I pay tax at 45%, so they paid me £500 to cover my £450 to HMRC and rounded it up (presumably as some sort of good will gesture).

I had assumed it would not likely impact others (or if it did, then like me, they would notice), but when I was telling someone else about this, they explained that small amounts of overpaid tax, if not noticed, might be reclaimed via a tax code change (also potentially, not noticed [or understood])... so it has been niggling away at me, to the point that I think I should probably raise it further.

This is a very niche problem, only likely to impact those redeeming an Offset Mortgage with a certain lender (so a once in a lifetime event... not an annual savings interest event). They have said that they will refer the issue to the relevant team, but, I still thought I should raise it. I don't want to drag their name through the mud on a public forum, as they've tried to do the right thing by me at least, but I'm torn, as it may impact others.