Should I accept £25 compensation?

Careful_with_that_Axe

I put £60K in Sainsburys Internet Saver account for a couple of months as a holding account earning interest while I researched a suitable income bond.

I requested the account be closed and the money repaid to me on 7th November, however, the money only reached my bank account on 19th November and they had deducted tax from the interest despite my filinf an R85 with them.

I subsequently complained and have been offered £25 compensation and a Certificate of Tax paid on Interest so I can reclaim this.

As the delay in repayment caused a knock-on delay in purchasing the bond (difference in unit prices and first payment of income in April) do peeps feel that the level of compensation is acceptable?

My own feeling is that the compensation should at least be equal to the amount of tax deducted from the interest repaid.

Would be grateful for views before I do anything else.

Many thanks

J

Riq

Well work out the figures as to how much money you would have if the transaction had gone through smoothly. If it is more than 25 pounds then write to them enclosing your workings. If it is less than 25 pounds then just be thankful they are being so generous.

dunstonh

You are going to get the tax back anyway once the R85 is actioned or you do it via your tax return if its too late. So, they shouldnt refund that element. In which case, £25 seems fine.

bristolleedsfan

Careful_with_that_Axe wrote: »

Iand a Certificate of Tax paid on Interest so I can reclaim this.


J

As long as the tax deducted relates to the current tax year, Sainsburys should be able to recredit you with the tax that they deducted as long as they are in receipt of a R85 before the end of the current tax year. ( saves you claiming it back from IR office)

( Two different Building Societies have informed me that the above is the case)

Careful_with_that_Axe

Riq The calculations for this are likely to be rather complicated and, at the moment, I don't feel so inlcined.

Ta for comments and advice and dunstohn's usual reliable words of wisdom <g>

Mikeyorks

Careful_with_that_Axe wrote: »

My own feeling is that the compensation should at least be equal to the amount of tax deducted from the interest repaid.

I don't see any logic to that I'm afraid .. as it's a transient reduction. But I doubt they will agree to consequential compensation - that would open them up to potentially massive losses for any small error?

On the R85. A number of Banks / BS's retrospectively apply a newly filed R85 to all interest deducted on the account that tax year (Halifax is one of them .. there is a well hidden list on the HMRC site, I can never find when needed). So if an R85 is already in place .. the correct thing is that they should refund you the tax. There shouldn't be any question of that .. and you should press for it.

Later

As ever, can't find the list of Banks / BS's that have systems capable of retrospectively applying an in-year R85. But what I'm indicating above is ratified (?) by this extract from the R85 (Helpsheet) :-

If your bank or building society has already taken tax off your interest in this tax year 2007–08, which runs from 6 April 2007 to 5 April 2008, they may be able to repay it to you.

bristolleedsfan

http://www.hmrc.gov.uk/taxback/question14.htm

http://www.hmrc.gov.uk/taxback/example39.htm

All I can find, i know Nationwide And Leeds BS will recredit tax deducted as long as it relates to current tax year and a R85 is in place.

Careful_with_that_Axe

I would stress that I'm not trying to screw extra money out of them. But when I complained (a complaint that they were required to convey to the FSA) the reason was that "November was very busy". Between my initial request for repayment and the funds hitting my account, at no time did they advise me of any possible delay and this annoyed me!! I know you don't get compensated for annoyance, but still ........

Mikeyorks

Careful_with_that_Axe wrote: »

"November was very busy".

Understand your annoyance with them. And whilst the above (I bet December was as well:rolleyes: ) may be their excuse for a slow manual closure of the account ... it doesn't mitigate the tax deduction at all. If the R85 was filed .. there's no legitimacy for them not correcting the interest position.

It's quite likely 'your tax on interest' has now been paid across to HMRC as Advance Corporation Tax. But that's simply a lump sum with no allocation to individuals .. so they merely correct it on the next quarterly return. But they can correct your situation (but only) up to 5th April. Thereafter if you apply to HMRC via R40 .. you could be waiting months. And particularly if they decide to ask you for statements of other interest etc ... on the premise £60k is a sizeable single sum on which to file an R85?

Careful_with_that_Axe

Mikeyorks wrote: »

Understand your annoyance with them. And whilst the above (I bet December was as well:rolleyes: )

You would think they would havd anticipated this wouldn't you! :idea:

I understand your comments re the sizeable sum - after only a few hours sleep so bear with me if I have misunderstood! Monies came about from a legacy, not from savings from earned income and the income from this bond (£880 per quarter), IB and DLA (not yet started) plus some minor interest from savings accounts and various ISA's are my only income. I do intend to review my situation each tax year to ensure I have not breached the threshhold and am not liable for tax.
I'll be contacting Sainsburys today and following up conversation with a letter and will do as you suggest.

I am grateful for all the help - thank you.

Mikeyorks

Careful_with_that_Axe wrote: »

.......so bear with me if I have misunderstood!

You've only misunderstood .. to the degree I certainly wasn't asking for an explanation!:o

Merely pointing out that HMRC won't deal with a refund prior 6th April - and may well ask for details of all your other interest before they would deal with a refund (as they won't tend to d/w refunds from one source 'in isolation') As 'Certificates of Interest' tend not to be supplied, generally, before mid-May .....then you're into at least June before you get your money back?

So, apologies if I was explaining it a little clumsily, but I was just really pressing the fact that the clear cut route is to get Sainsburys to honour the R85 they already have from you? There's no 'Regulation' reason they can't
do it ... so it can only boil down to a 'process' reason. And it's amazing how a different set of eyes (at Sainsburys) will often work out an immediate way around a process problem - if you apply a bit of pressure and say 'now get it right'!

Best of luck with it.