TONY HETHERINGTON: HM Revenue & Customs taxed me on £14,000 savings interest that wasn’t mine

Tony Hetherington is Financial Mail on Sunday’s ace investigator, fighting readers corners, revealing the truth that lies behind closed doors and winning victories for those who have been left out-of-pocket. Find out how to contact him below. 

P.T. writes: HM Revenue & Customs informed me that I had paid too little tax in 2022-2023, because I had received over £14,000 in untaxed interest on savings. The savings figure was supplied to HMRC by National Savings. 

Unfortunately, I have no such account or interest. It is fictional. 

I contacted the tax office, but now I have been told the Pay As You Earn tax code for my work pension is being changed, leaving me worse off by about £500 a month and cutting my pension by about a third. 

Tony Hetherington replies: Once the tax juggernaut starts rolling, it is very hard to apply the brakes. Your first inkling that anything was wrong came when you received a demand for £2,751, which was said to be tax due on interest of £14,750. All the taxman could tell you was that the figure had been supplied by National Savings, but officials there were no help either, as you could not give them the account number of the account you did not have in the first place.

You wrote to National Savings & Investments (NS&I) and received a written reply saying there was no account in your name. But, by then, the tax office had changed tack and decided to collect an extra £500 a month from your pension.

Staff assured you that you would not lose out in the long run if the tip-off from NS&I turned out to be wrong. But this is little comfort when you are losing such a huge slice of your pension for no reason.

I asked HMRC to look into this and they moved with commendable speed. Three days after I contacted them, you received a call from the tax office, apologising and offering £75 compensation, as well as issuing you with a new PAYE code. Instead of £2,751, you owe £1.80p. NS&I routinely tells the Revenue about large interest earned by savers, and tax staff then link the tip-off to the taxpayer’s records. In a nutshell, someone really did get £14,750 interest – but HMRC linked this to you by mistake

I’ve been waiting over a year for my pension lump sum

Ms A.S. writes: I was due to receive a pension plan lump sum of £19,417 from Phoenix Life on my 75th birthday, which was in January last year. I was also due to receive £3,010 in January this year.

I have not received a penny.

I now have a thick file of correspondence and emails, in addition to phone calls I have endured over the past year or so. Every time, I am assured someone will phone me back, but it never happens.

I have a terminal lung condition. Time is not on my side. I am desperate.

Pathetic: After weeks of waiting and fruitless phone calls, it turned out that Phoenix had actually sent its enquiry to its own address

Tony Hetherington replies: In so many large companies it is hard to find someone who will actually take responsibility for sorting out a problem instead of handing it over to someone else in a never ending game of pass-the-problem.

You told me that at one stage, Phoenix claimed to be waiting for a reply from the trustees of your old employer’s pension scheme. After weeks of waiting and fruitless phone calls, it turned out that Phoenix had actually sent its enquiry to its own address and not to your old employer.

On another occasion, you told me, Phoenix sent forms to you. You completed them and returned them, only to have Phoenix tell you that the forms should have gone to the trustees of the pension scheme. This happened last August, but in October exactly the same forms landed on your doormat again, and again they were meant for the trustees.

The final straw before you contacted me came when you called Phoenix three times, and each time you were told that the person handling your claim was on another call and would get back to you.

He never did, and when you called for a fourth time you were told he had gone off on a training course for two months and would contact you on his return.

I contacted Phoenix on your behalf and, four days later, £23,391 landed in your bank account. This was both your overdue payments, less income tax deducted at source. Phoenix initially offered £200 by way of an apology, and £20 to cover all your calls and any other costs.

This was pathetic. It did not even scratch the surface of what you could reasonably expect, and I said so. Phoenix has reconsidered. It has now paid you £1,652 as interest on the late payments, with a further £1,025 as compensation for the upset.

But adding a final rather bizarre twist to all this, you received one last letter from Phoenix, thanking you for your recent request to change your name. You told me you had held the same name since you got married 56 years ago, and you have no intention of changing it now. Phoenix explained to me that it had just spotted that its records had never noted your middle name, so the records had been changed, but you should never have been contacted or bothered about this.

A spokesperson told me: ‘It is clear from the findings of our investigation that the service we have provided to Ms S has fallen considerably short of what she should expect, especially at a time when she needed our help, and we are very sorry for the upset and distress this has caused her at an extremely difficult time.’

If you believe you are the victim of financial wrongdoing, write to Tony Hetherington at Financial Mail, 9 Derry Street, London W8 5HY or email [email protected]. Because of the high volume of enquiries, personal replies cannot be given. Please send only copies of original documents, which we regret cannot be returned.