HMRC sending me cheques I'm not sure I should be getting?

[FelixFelix]

I am on ESA for ill health but do not receive any income from that due to my partner earring over the limit.

My partner deposits money into my account depending on how much I need and I get £250 a month from my parents (they are well off). I have about £13'500.00 in savings: £9000 in premium bonds and £4500 in a low interest savings account.

 

Last November I received a cheque from HMRC for £500 as a repayment for the year 2019 - 2020 as they had taxed me that amount on a savings income of £2500.

 

I thought this was incorrect, I called them to find out why this was sent to me. I was told an investigation would be done and that it would be into 2022 before I found out the outcome.

 

I waited until early March then I called again to get an update. The line was very poor and the woman I spoke to told me I would receive a letter soon.

 

What I received was a letter detailing another refund for £500 for another year “2020 - 2021” for a savings income of £2500.

I then waited again to see if another letter came but I only got another cheque.

 

I finally called them again today and was told I could cash both cheques. I tried to explain about my savings and that I hadn’t earned £2500 interest on them but was told that if the system and investigation shows my entitlement then the money is mine.

 

I did win some substantial PPI claims in 2018 - 19 and was never clear if I had everything back that I should have (including tax wise) so there is a plausible reason why I might have money owed to me. But really I don’t know.

 

I did the right thing by contacting HMRC, they investigated and I’m still being told to cash the cheques. I wish they would send a letter to this effect but they haven’t and won’t.

 

What should I do?

I could just cash the cheques and stick the money in savings if they ever want it back or I could rip the cheques up?

[dx100uk]

you would have been charged 20% tax on the PPI refund, that if you were not earning over your tax code earnings limit, should not have been charged.

 

as for what is going on now i've not a clue, but i would suspect that only ONE of those £500 cheques (you have 2?) should be cashed, i suspect a second was issued because you did not cash the 1st one? within the tax year it was issued?

 

tax is not my strongest subject but if it is to do with you historic PPI reclaims, which is one of my old expert subjects,  then in total you must have gotten about £2500+ directly back to you in PPI refunds? 

[FelixFelix]

I specifically asked the guy on the phone if I should cash both cheques and he said yes, they are not for exactly the same amounts, the second cheque is for slightly less,

 

of course you could also be right!, I got around £5000 back in PPI reclaims but only previously got about £450 back in tax refund, I was never sure if this was right but at the time was happy with the £5000.

 

I think they must be reading the PPI reclaim as savings income given that their is interest on that (the claim went back to 2003). The guy on the phone made it sound like the investigation had turned up additional funds I was owed but perhaps he didn't look too deeply into things?

 

I'd call them again but its either they fob you off or it takes forever to get yet another confusing response!

Edited May 17 by dx100uk
unnecessary previous post quote removed

[dx100uk]

HMRC at the time would have been paid the 20% tax on any PPI reclaim directly by whomever gave you the rest of the PPI full refund. HMRC would be fully aware of what it was and where it came from,

 

as for the 2nd cheque, they could well be also giving you 8% flat rate interest rate on the sum too, as they have deprived you of being able to invest it from the time it was levied against you until today.

 

did the investigator mention this 20% TAX on your PPI reclaims at all, or are you just guessing these cheques are related to any PPI reclaiming?

 

 

[Ethel Street]

So they've calculated that you overpaid tax for the tax years 2019-20 and 2020-21. The two cheques appear to be for different tax years.

 

As well as the cheques they should also send you a tax calculation for each of those years showing how the tax refund has been calculated.  Because the tax calculation document and the cheque are sent out by different bits of HMRC I've often had the cheque before I got the tax calculation.

 

Call them and ask if they are sending you the tax calculation. That should tell you exactly how they arrived at the amounts they've sent you cheques for.

 

Incidentally if you are ever discussing your savings with HMRC note that Premium Bond prizes are completely tax free. You also don't have to declare them to HMRC or include them on any income tax return.

[Ethel Street]

Re-reading your post I'm not clear whether you have cashed either of the cheques yet.

 

Normally HMRC cheques are only valid for 6 months from the date of issue (the date on the cheque). If you haven't paid them into your bank yet the one you got last November may already have gone out of date. If it isn't out of date yet pay it to your account quickly. If it has gone out of date you'll need to contact the taxes helpline to get a replacement cheque sent. 0300 200 3300

[FelixFelix]

I am guessing at a link to PPI as HMRC won't send my anything pertaining to the investigation in writing although I've asked for it. This matter is already supposed to have been investigated by HMRC so this is all post investigation and I've been told to cash both cheques on the phone today.

 

I received two tax calculations form HMRC both saying the tax repayment was from Savings Income, the amount on both these calculations is actually slightly different to the amounts on the corresponding cheques, just a few pounds out.

 

As you can no doubt tell I did not received a huge amount of savings income / or interest from my savings more like £2 as opposed to £2500!

 

The only thing it could be is PPI, if it isn't that then it must be an error.

 

However HMRC have already investigated this and the outcome is that the money is mine?

Why would they make another error like this after investigation?

 

Are HMRC that incompetent?

Was the call handler who was taking my call and put me on hold to look at my case just too lazy / busy to actually check?

 

I feel like they are putting me in a bad position by not properly explaining the outcome of the investigation by sending a letter.

 

Obviously I don't want to take or spend money I'm not entitled to but at the same time don't want to not get it if it is due to me.

 

@Ethel Street , I have not cashed either cheque yet so probably would have to request a replacement for the November Cheque now.

[slick132]

Hi FF,

 

You say you received 2 tax calculations from HMRC both saying the tax repayment was from Savings Income. So we can try and identify what's happened here, can you please tell us for each of the 2 tax years :-

 

1. Is there an income entry for (what you assume to be) PPI with corresponding tax paid on it.

 

2. How is it described.

 

3. What figure is shown for this income and for the tax deducted.

 

4. What was your approx total income from all sources included earned income and savings income but ignoring money from your partner, Premium Bonds or ISA income.