Alliance Leicester ISA woe

dwh_3

I opened a new Premier ISA Issue 2 (the 10% one, accounts starting 802) shortly before the end of the tax year (penultimate week of March, I think)... My account appeared in my online banking the very beginning of April, and April 4th I put last year's £3000 into it. April 11th I put this year's £3600 into it. My balance on the internet banking has shown its balance as £6,600 since.

Oh May 5th, a letter was sent to my by A-L, telling me "As you may already be aware, it is believed that the original application form completed for your account was incorrect or incomplete. In line with HM Revenue & Customs regulations, as the application form has not been corrected and provided to us within 30 days of the original application, we have had to invalidate your ISA. Therefore, this means your account will be receiving interest net of tax.

Please could you contact the branch as soon as possible and discuss in more detail, to ensure that you do not lose out on your tax-free allowance."

Well, this was the first I'd heard of it, and needless to say I was stunned! I went into my branch today, to sort out seeing the branch manager... The teller told me that they were hugely oversubscribed with their ISAs, and the head office didn't manage to send them all in to HMRC in time to open the accounts. The branch manager's ringing me in the morning...

I'm guessing that HMRC won't let them backdate the accounts? I'm going to see what the branch manager says in the morning, but if they can't backdate the opening of my account, I'm certainly going to be writing an angry letter demanding reasonable compensation for their negligence (10 years' tax on interest!).

Has anyone else had something like this happen? Any advice?

bigturnip

The fairest way would be to give you a 25% lump sum (£750) if you are a basic rate tax payer or a 66.6% lump sum (£2000) if you are a higher rate tax payer, you can then invest the money with the original £3,000 in a normal savings account and once you deduct the 20%/40% income tax, assuming you get the same gross rate as an ISA, your interest is exactly the same as if it was in an ISA.

Of course this way you are gaining the capital and the chances of them actually offering it to you are pretty much zero, but if you don't ask you don't get.

This is all conjecture at the moment as you need to speak to the bank manager, it may be for a completely different reason.