SA repayment issued to client (been waiting 4 weeks) the money has been credited to his account by bacs but was recalled by hmrc the same time. His bank account is now frozen until further investigation with an additional 500 pounds balance he had in the account before the repayment was received. Has anyone else here had a similar experience, and if so - what was the outcome - size of repayment was 4k ish if that makes any difference? hmrc call centre staff have nothing on their system other than confirming the payment has been issued out! Have never seen repayments recalled like this especially as i assume it passed the security checks before being issued out....can anyone clarify what has happened through knowledge or a similar experience of this?
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Frozen Bank account
normally the bank would have another reason for freezing a bank account, they wouldn't freeze it for a payment getting recalled. I would say the client's first port of call is to the bank to get the account operational. Re: HMRC I have never seen a payment recalled either
Frozen
Yep, sounds like the account was frozen before the money was received and so its 'bounced' (like a bad cheque in reverse).
Your client's name isn't Mr. B. Assad is it?
Victor Meldrum
Can you imagine HMRC discussing a client with a bank ? You are not being told truth.
Third party debt order?
see here:
http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm667130.htm
I wonder if your client has other debts to HMRC? That would account for the order and also for "recalling" the repayment which might in fact mean they are trying to stop it with a view to getting it offset against those other debts.
Money laundering issue?
That sort of secrecy tends to surround not tipping off one of the reasons I wont accept client repayments direct in case I get left with funds I can't repay
I am thinking . . .
I am thinking one of:
1. Client owes money to HMRC for which they have already started formal legal proceedings which enable HMRC to freeze the bank account OR
2. Client is under investigation for a serious criminal offence of some description which has resulted in the criminal court making an order freezing his assets (in which case the client should have himself received a copy of the court order) OR
3. The bank have taken it upon themselves to freeze the account in connection with suspicions of money laundering (and are deliberately keeping the client in the dark about their suspicions) OR
4. Sheer incompetence and confusion reigns.
I suggest you talk to the client, particularly about the possibilities of either 1 or 2 above. I can see that 3 might be triggered by HMRC sending a refund payment and then recalling it.
David
This happened to me personally,
We received a large tax refund into our joint, personal, bank account, and immediately made a large payment (as we'd been waiting for the receipt).
Almost immediately HMRC recalled their payment and we were left overdrawn and the bank was bouncing SOs and DDs. No-one told us until the cash machine didn't work and we started asking why.
The explanation given by HMRC was that they recall random large repayments for double checking !
The money went back in about a week later. After a lot of complaining they re-imbursed bank charges etc, but it didn't do my blood pressure any good for a while.
Bounced Repayment
I have also seen a payment recalled by HMRC it was for around £10k I believe. Their reason was 'additional securioty checks'. It took around 2 weeks to be credited properly in the client's bank account. No problems with frozen bank accounts however.
Outrageous
Is it only me that thinks this that HMRC having the option to recall tax refunds is outrageous? I have presented them to my clients as being quicker, easier and safer than cheque repayments and have never had a hint that funds could be recalled.
Could someone with some banking experience tell us what the parameters for recall of a BACS credit are, same day or some longer timescale?
And the idea that HMRC has the power to recall repayments for 'additional security checks' is laughable given that the introduction of security checks a few years ago was never announced and once a tax refund is thus diverted there is no guaranteed timescale when it will be paid.
I hope the OP gets to the bottom of this and shares with us exactly why this happened, which I acknowledge may or may not be due to HMRC action.
Tim