20% VAT on PPI Reward from RBS?

[Mr Kangaroo]

Hello, anybody knows if PPI reward is subject to VAT? (Reward is under 4K, that is).

[di30]

Re: 20% VAT on PPI Reward from RBS?

Hiya

Just the interest at a basic rate I believe.
If unemployed, you can claim it back from the HMRC, but if a higher tax payer, I think you get in touch to make arrangements for further payment on the tax "I think"

Some businesses will tax automatically, but will confirm otherwise.

Is that the question you mean? sorry if I got it wrong, "not been with it today, kidney infection

[Mr Kangaroo]

Re: 20% VAT on PPI Reward from RBS?

Thanks. Sure, it is a question. A friend of mine has been awarded PPI refund but it has been deducted 20pc VAT. He isn't self employed and it's the first time i've come accross. I was wondering if anyone has had VAT on their PPI awards.

[miliitant]

Re: 20% VAT on PPI Reward from RBS?

was that through a claims management firm

[Bill-K]

Re: 20% VAT on PPI Reward from RBS?

As Di says, the only interest which is occasionally deducted 'at source' is Income Tax on the 8% Statutory Interest which may be added to the total PPI Refund. I have never seen VAT deducted from this, and I think Militant's question is probably the answer in itself. A CMC will deduct its fee from the PPI refund, and that fee will include VAT. If the claimant is VAT registered, then they may be able to reclaim that VAT.

[Mr Kangaroo]

Re: 20% VAT on PPI Reward from RBS?

Hi Miliitant & Bill-K. Thanks. No, it is neither through CMC nor the claimant is VAT reg'd. I though it is strange. He's written to the bank asking for an explanation and breakdown (because the bank didn't enclose a breakdown of it's calculation either!). He's given it 14 days to reply so will update you on this issue as soon as.

[Bill-K]

Re: 20% VAT on PPI Reward from RBS?

FWIW, the FSA rules state that the claimant should be given a clear explanation of how the PPI redress has been calculated.

[Mr Kangaroo]

Re: 20% VAT on PPI Reward from RBS?

Bank responded, not much info about how it came about deducting 20pc onto the reward. Would SAR letter help?

[Mr Kangaroo]

Re: 20% VAT on PPI Reward from RBS?

I mean in wanting to see the original application form which may suggested something e.g Claimant was self employed?

[Bill-K]

Re: 20% VAT on PPI Reward from RBS?

A DSAR might help, but I feel sure there must be some confusion here. I really cannot understand how a lender could charge VAT on a PPI refund. Can you scan and post any (redacted) copies of relevant correspondence for us ? If they have charged VAT, then I'm wondering if this is an offence to be reported to H.M. Customs & Excise. You might get a faster response than if you refer it to the FOS !!!

[Mr Kangaroo]

Re: 20% VAT on PPI Reward from RBS?

Sure, will get hold of my friend and ask for it (and his permission).

[Mr Kangaroo]

Re: 20% VAT on PPI Reward from RBS?

Finally, when challenged and by requesting an itemised breakdown on how they came about to the final figure (including their 20pv VAT) RBS sent a chq for FULL amount £4K and not £3K offered earlier!