PPI Refund 4 Me responds to ACCA call to waive tax on PPI compensation interest

July 4, 2012 - PRLog -- Head of taxation at the Association of Chartered Certified Accountants (ACCA) Chas Roy-Chowdhury has said that interest on PPI claims compensation should not be subject to taxation by HMRC.

The Financial Services Authority (FSA) has awarded consumers mis-sold PPI 8% interest on the money they spent on worthless PPI policies, the cost of which is now being refunded to thousands of consumers.

For more information please visit us at http://www.ppirefund4me.co.uk

The HMRC said in November 2011:

"No tax is generally due on the repayment element of compensation paid to those mis-sold PPI."

"However, the additional interest is taxable in line with other compensation claims."

The Treasury stands to make hundreds of thousands of pounds from tax on PPI compensation interest - some lenders like RBS and loan companies deduct tax at source from PPI claims settlements.

•    The taxation is based on interest which would have accrued had the PPI payments been kept in an interest-bearing account.

•    However, many consumers missed out on the potential of accruing interest on the money they had to spend on PPI payments - the 8% awarded by the FSA remedies this.

•    HMRC rules regarding the status of taxpayers affect tax on PPI interest - eg non taxpayers who have tax deducted at source on PPI compensation interest need to apply to HMRC for a tax refund.

•    Mr Roy-Chowdbury says that HMRC is following existing rules, but the law should be changed and is calling for the government to waive this tax.

•    Mr Roy-Chowdbury has also pointed out that the current taxation requirement means PPI claimants whose settlements are paid gross may be underpaying tax without realising it.

•    The average PPI compensation payout is GBP3,000 - the FSA estimates a total of around GBP9bn will constitute the total final payout once all PPI claims are settled.

PPI mis-selling and financial sector profits

The FSA estimates that many financial institutions - including high street banks - went on to profit from the mis-selling of PPI by as much as 15% of their total profits. FSA Chief Executive Martin Wheatley:

"We have to ask why boards of banks did not ask the management of firms about how things like PPI could be so profitable - 15% of some banks' profits - and still deliver the fair treatment of customers."

The PPI Claims industry has frequently been accused of profiteering from handling claims on behalf of consumers mis-sold PPI, many of whom have paid out thousands of pounds for worthless insurance policies.

The complexities surrounding tax issues relating to PPI claims and dealing with financial institutions means many people may not feel able to handle their own claim - or may end up owing the HMRC tax on sums without being aware of their tax liability.

The PPI claims industry exists to correct years of mis-selling of payment protection policies, which plunged many consumers often needing credit to buy essential items further into debt.

PPI Refund 4 Me supports the ACCA's call for the government to withdraw taxation on interest payments awarded by the FSA to consumers who were mis-sold PPI by the financial sector.

About PPI Refund 4 Me

PPI Refund 4 Me endeavours to offer the best possible PPI claims service to its customers - and has helped thousands of consumers obtain a refund for mis-sold PPI.

PPI Refund 4 Me is regulated by the Ministry of Justice and appoints a dedicated account manager to each of its customers whom they can speak to whenever they call.

PPI Refund 4 Me does not believe in cold calling, sending unsolicited emails to potential clients or misleading consumers over our fees or the chances of receiving a disproportional settlement for any PPI claim they make.

PPI Refund 4 Me is always transparent about its fees and nothing is paid until a settlement with the financial institution has been agreed.

PPI Refund 4 Me offers a PPI claim service on a No win No fee basis to customers with FREE initial advice -- many customers discover our services by word-of-mouth or recommendation.

PPI Refund 4 Me had GBP350,000-worth of PPI claims successes in November 2011.

Contact:

PPI Refund 4 Me
201-204 Murdoch Chambers
153A Corporation Street
Birmingham B4 6PH
Tel: 0121 2364843 (0800 044 5196)