What is the method of reclaiming (or getting the credit) for tax deducted in error by a bank paying interest to a company?
Colin White
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I have never known a bank refuse to put this right immediately it is pointed out.
Not always!
The posting below about reclaiming through the CT600 has always been my method of choice, however on one occassion recently i've had an over-enthusiastic HMRC Inspector refuse the claim and suggest that the company pursue their bank directly. The amount was pennies!
Gross up and complete box 84
Regrettably poor training of bank staff does result in the wrong marker being applied to the customer's account. Getting the bank to repay the tax deducted is time consuming and they frequently refuse to compensate either the lost interest on the tax paid early or for the cost involved in getting it put right. It is always the client that needs to do this and often takes several phone calls. Rtaher than adjusting the wrong treatment in the past I usually settle for grossing up the nety interest and including that amount in the tax computation you then reclaim the tax deducted by completing box 84 on the CT return.
Bank error
Usually dealt with by getting the bank to refund the tax paid in error (and of course pay interest gross in future as well)