Tax Repayment instantly recalled !!!! - account frozen !

Tax Repayment instantly recalled !!!! - account...

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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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By VirtualAccounts
11th Sep 2013 14:55

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

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Should Be Working ... not playing with the car
By should_be_working
11th Sep 2013 15:09

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?

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By sammy10
11th Sep 2013 16:53

nope, account fully operational beforehand. client informs me the bank have frozen the account pending a letter that is supposed to be sent directly to my client from hmrc explaining the reason for the recall. staff at the bank called the payer (hmrc finance dept i guess) and passed on the message that he will receive a letter from hmrc that he must bring with him to unfreeze the account. - all very strange - am assuming recalling tax repayments is a rare occurance?

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By Tosie
11th Sep 2013 17:24

Victor Meldrum

Can you imagine HMRC discussing a client with a bank ? You are not being told truth.

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By sammy10
11th Sep 2013 17:55

client went to bank to find out what was going on with account as his card was eaten. repayment shown payed in then immedietley sent back (recalled). bank staff called someone in the background ( i assume hmrc to confirm where the payment came from and that it was recalled.) client told by bank staff nothing could be discussed until account unfrozen. bank staff just said a letter would be on its way. I know of cases where hmrc would contact the client first by letter before sending the repayment to a nominee to confirm the instruction is correct, but have never seen a repayment go through security checks then recalled after issue, however I can see recalled repayments do occur, as there is plenty of information on the hmrc website. the return was completed by an agent and repayment sent directly to the client.

client now worried and so am I ?

 

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By Anthony123
11th Sep 2013 17:58

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.

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By coolmanwithbeard
11th Sep 2013 19:26

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

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David Winch
By David Winch
11th Sep 2013 19:28

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

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By jpcc1
12th Sep 2013 15:42

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.

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By sammy10
12th Sep 2013 16:52

jpcc1 - many thanks - at least someone else has seen this happen with a recalled repayment - i could understand it if the repayment had not been through the security checks and was suspicious but this was for only 4k ish and was stuck on repayment pending for 4 weeks as had been selected for security checks (it seems anything above 1k usually is) and the repayment was direct to the taxpayer not a nominee or agent. I will give it a few days and call the agent helpline and hopefully their systems will show the recall on their end as at the moment, all they can tell me is that the money has left their end! - Nothing about a recall however and am sure only the HMRC accounts/payment or security dept are privy to this info. Did the amount avaliable for repayment ever become visible back on the hmrc taxpayers record?

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By KATEA
18th Sep 2013 12:58

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.

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By Tim Robinson
21st Sep 2013 10:58

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

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