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  • FIRST POST
    • Mellyhen
    • By Mellyhen 8th Jul 18, 8:28 AM
    • 21Posts
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    Mellyhen
    Help after ppi now have a huge tax bill
    • #1
    • 8th Jul 18, 8:28 AM
    Help after ppi now have a huge tax bill 8th Jul 18 at 8:28 AM
    A year Go my husband used a finance company to see if we had any ppi as many of our friends had had successful claims. We did it & had a very successful claim. The company were very thorough dealt with the award sorted the tax & took their cut of course! A year later we have a letter from HMRC says we owe them a huge amount of underpaid tax . After a chat on the phone it turns out it was the ppi award, not enough tax was paid on it leaving a shortfall owing to HMRC.
    NOW what I want to know is do I have a right to complain to the finance company to get the money from them maybe as we paid them for a service they didnít fulfill they made a mistake working out the tax ,are they liable do I have any rights?
Page 2
    • Mellyhen
    • By Mellyhen 8th Jul 18, 9:52 PM
    • 21 Posts
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    Mellyhen
    Sorry you misunderstand me
    The award was£11852
    Income tax on that was £1413
    • Mellyhen
    • By Mellyhen 8th Jul 18, 9:54 PM
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    Mellyhen
    The HMRC man said the same so the tax was miscalculated
    • Dazed and confused
    • By Dazed and confused 8th Jul 18, 9:55 PM
    • 2,701 Posts
    • 1,307 Thanks
    Dazed and confused
    Who advised HMRC of the PPI information?

    You do realise that that it is only the PPI interest which is taxable, not the actual PPI element.

    Check your hubby's PPI paperwork, does that show something like interest £7065 with tax deducted of £1413??
    • Mellyhen
    • By Mellyhen 8th Jul 18, 9:57 PM
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    Mellyhen
    £11852 was the award before tax & their deductions we actually got just under £6000
    • Mellyhen
    • By Mellyhen 8th Jul 18, 9:58 PM
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    Mellyhen
    I think I need to talk to HMRC again donít I?
    Last edited by Mellyhen; 08-07-2018 at 9:59 PM. Reason: Typo
    • Mellyhen
    • By Mellyhen 8th Jul 18, 10:01 PM
    • 21 Posts
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    Mellyhen
    The claims company advised me to submit a form to HMRC to try & claim the tax back, so is probably my fault they were informed by me!
    • Mellyhen
    • By Mellyhen 8th Jul 18, 10:08 PM
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    Mellyhen
    We donít live in Scotland & hubbys pay is well below £40,000
    • Dazed and confused
    • By Dazed and confused 8th Jul 18, 10:12 PM
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    Dazed and confused
    To be fair the claims company have probably genuinely tried to help your hubby.

    But I would advise against phoning HMRC again until you are absolutely certain of the facts.

    If your hubby isn't a higher rate tax payer but earned more than £16,500 then he can take advantage of a 0% tax rate which applies to savings interest (this includes PPI interest). Upto £1,000 of interest can be taxed at 0% in this situation.

    So if the PPI paperwork shows the interest was actually about £7065 and his calculation is changed to reflect this then that reduces his taxable interest income by £4787 (£11,852 down to £7065).

    As basic rate payer this will likely reduce his tax liability by £958 so the bill for £758 will become a tax refund of £200.

    Once you (or hubby) are sure what the correct PPI interest which needs to be declared is then you will need to explain to HMRC that you told them the wrong info in the first palace and ask them to alter his calculation. Don't be surprised if they want copies of the paperwork as proof.

    £11852 was the award before tax & their deductions we actually got just under £6000

    That is an expensive stamp the claims company used!!
    Last edited by Dazed and confused; 08-07-2018 at 10:14 PM.
    • Mellyhen
    • By Mellyhen 8th Jul 18, 10:22 PM
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    Mellyhen
    That is same as HMRC Guy said, so who calculated the tax & is a ppi claim classed as savings because it is on the HMRC paperwork is that whatís messing this all up?
    • Mellyhen
    • By Mellyhen 8th Jul 18, 10:23 PM
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    Mellyhen
    Not claim I meant to say ppi award
    • Mellyhen
    • By Mellyhen 8th Jul 18, 10:25 PM
    • 21 Posts
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    Mellyhen
    I will talk to the claims company tomorrow, Thankyou everyone who has tried to help me x
    Last edited by Mellyhen; 08-07-2018 at 10:26 PM. Reason: Typo
    • Dazed and confused
    • By Dazed and confused 8th Jul 18, 10:29 PM
    • 2,701 Posts
    • 1,307 Thanks
    Dazed and confused
    It seems likely the problem you have is that you/hubby have reported some non taxable income (the actual PPI refund) to HMRC when they only need to know about the taxable element, the interest (and tax deducted).

    Let us know the outcome.
    • Nearlyold
    • By Nearlyold 8th Jul 18, 10:29 PM
    • 1,091 Posts
    • 919 Thanks
    Nearlyold
    In simple terms a PPI refund consists of
    (a) The premiums you paid being returned to you.
    (b) Statutory Interest at 8% annum simple on the premiums paid.

    You DO NOT pay tax on (a) you only pay tax on (b). It sounds as if you have confused HMRC by incorrectly giving them (a) plus (b) as the amount you received which is taxable.
    • Mellyhen
    • By Mellyhen 9th Jul 18, 2:41 PM
    • 21 Posts
    • 0 Thanks
    Mellyhen
    Finally sorted
    I got it sorted, no tax owing at all ,it was already paid by the bank before we were awarded it! I had incorrectly entered the full award & not the interest only on an r40 form to try & claim the tax back & of course the tax deducted didnít add up with the amount I had entered as interest!
    I since found out After talking to 4 HMRC representatives that I should not have filled out that form anyway as itís for non tax payers to claim. Only one of them pointed that out to me!
    Anyway finally sorted!
    A bit cross with HMRC as I sought their advise before going ahead with the claim & not one told me I wasnít eligible to even bother trying!

    Thank goodness & thank you for all your advise I am now a little wiser!
    • Moneyineptitude
    • By Moneyineptitude 9th Jul 18, 4:38 PM
    • 20,619 Posts
    • 11,474 Thanks
    Moneyineptitude
    you will need to explain to HMRC that you told them the wrong info in the first place and ask them to alter his calculation.
    Originally posted by Dazed and confused
    I got it sorted, no tax owing at all ,it was already paid by the bank before we were awarded it! I had incorrectly entered the full award & not the interest only on an r40 form to try & claim the tax back & of course the tax deducted didn!!!8217;t add up with the amount I had entered as interest!
    Originally posted by Mellyhen
    Just as "Dazed and confused" explained.
    £11852 was the award before tax & their deductions we actually got just under £6000
    Originally posted by Mellyhen
    So you paid £5,852 for the Claim Company to put a stamp on the envelope containing your complaint!

    If you had complained directly you could have kept all of this money and you wouldn't even have paid VAT!
    • dunstonh
    • By dunstonh 9th Jul 18, 4:42 PM
    • 93,386 Posts
    • 60,890 Thanks
    dunstonh
    A bit cross with HMRC as I sought their advise before going ahead with the claim & not one told me I wasn!!!8217;t eligible to even bother trying!
    Are you not a bit cross with the CMC as:
    1 - they didnt tell you this despite you employing them
    2 - You paying them over £5k for using a free of charge service?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Kent guy
    • By Kent guy 10th Jul 18, 5:02 PM
    • 3 Posts
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    Kent guy
    Ive just had a payout from FSCS to which attracted a Ďnotional returní on the amount. I phone HMRC and explain that I wish to pay tax on it and their answer is Ďas far as HMRC is concerned you are not liable to pay taxí, I again went on to say its a return on my money and Iím a full rate taxpayer.......basically I want to pay tax and they said thereís no need!!
    CONFUSED TOTALLY !!!128580;
    • Moneyineptitude
    • By Moneyineptitude 10th Jul 18, 5:22 PM
    • 20,619 Posts
    • 11,474 Thanks
    Moneyineptitude
    I want to pay tax and they said there!!!8217;s no need!!
    CONFUSED TOTALLY !!
    Originally posted by Kent guy
    Detail the amount you have been refunded and it will probably become clear why you are not liable for tax. Remember that you are only ever going to pay tax on any interest, not on the actual PPI refund.
    • dunstonh
    • By dunstonh 10th Jul 18, 5:25 PM
    • 93,386 Posts
    • 60,890 Thanks
    dunstonh
    Ive just had a payout from FSCS to which attracted a Ďnotional returní on the amount. I phone HMRC and explain that I wish to pay tax on it and their answer is Ďas far as HMRC is concerned you are not liable to pay taxí, I again went on to say its a return on my money and Iím a full rate taxpayer.......basically I want to pay tax and they said thereís no need!!
    CONFUSED TOTALLY !!!128580;
    Originally posted by Kent guy
    I would suggest you start your own thread rather than hijack an existing one in progress. Thread hijacking is considered inconsiderate as your questions could take the thread in a different direction and kill off the discussion by the OP.
    Copy and paste yours into a new thread.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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