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PPI claims handler deduction

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Client received £2000 PPI interest which is net of £500 tax. PPI claims handler has deducted commission of £480 from the net £2000 and paid the balance of £1520 to my client. What goes on the tax return? As far as the bank is concerned it paid out £2500 net of £500 tax and I guess this is what the bank would have reported to HMRC. I phoned HMRC ADL and they said I should record the actual payment received ie £1520 and that this should be recorded in the net interest which means it will gross up as £1900 gross and £380 tax. Is this correct? I'm not sure because it won't agree with the figures HMRC have received from the bank. Has anyone come across this? What is correct?

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By Paul D Utherone
23rd May 2019 10:54

If you do then White Space reasons. Sounds wrong though. Surely the client received £2,500 (gross) net tax of £500 and paid a personal liability to the PPI claims handler from the net received of £2,000 so should be returning £2k (net)

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Replying to Paul D Utherone:
Morph
By kevinringer
24th May 2019 10:42

I agree Paul, it does sound wrong which is why I've raised it here. Given the huge number of people who have made PII claims I was expecting to find HMRC guidance on it.

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By Jholm
23rd May 2019 17:21

Aside from the interest part, is there not a lump sum refunded? I would have thought the fee was based on that and therefore, n/a.

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Replying to Jholm:
By Paul D Utherone
24th May 2019 09:21

That crossed my mind, but I presume that they have charged fees on the total recovery including the interest and OP has split out the bit relating to the interest for the question

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Replying to Paul D Utherone:
Morph
By kevinringer
24th May 2019 10:41

Paul is correct, there was a lump sum and the claims handler retained 24% of everything: lump sum and interest.

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