Now that Grant Thornton are pursuing PPI and Unfair Charge claims, could someone from Grant Thornton make clear their understanding of the position of the individual with regard to the taxable nature of statutory interest payments?
Given that the liability for tax on statutory interest falls on the individual, what is GT's position on who receives any statutory interest payment, either in full or in part?
Sorry - I don't understand the issue you are making about tax on statutory interest. If there is a tax liability attributed to the receipt of statutory interest, that is the responsibility of the payee not the payer.
Another recent thread seemed to suggest that although statutory interest was paid for the benefit of the IVA, the liability to tax remained with the individual whose IVA it was.
I don't know whether or not that is true or even possible, hence my question / request for GT to outline their understanding.
Mel,
I think what is being said is that when an IP / company claims PPI back, with interest, the person doing the claiming (i.e the person in the IVA, even though a company is representing them) is then liable to pay tax on the money received. If they do not receive any money as it goes into the IVA pot who pays that tax as the HMRC will expect it from the person who made the claim.
If life is what you make it, I must have been in a strange mood when I made mine
Well that is a different issue from statutory interest! No wonder I was confused.
I don't think that a compensation payment gives raise to a taxable gain, but perhaps nepensioner could confirm this - being the forum's resident HMRC expert. It is not something I have ever thought of to be frank, but I am struggling to see why it would attract a tax liability.
HMRC's website states that the compensation does no attract a tax liability, but the interest does. If it is deducted at source ( which many institutions are not obliged to do, as this isn't an annual interest payment) there is no problem. However, if paid in full ( which my creditor intends to do ... to my IP) then it will attract a liability to tax.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I think that where the creditor pays interest on the missold PPI this attracts tax just as if it was saved. Normally this interest is taxed at source by the bank but if they pay it gross i.e without deducting the tax then the client will be liable to tax on the interest paid.
The amounts should be relatively small and given that the PPI is an asset of the IVA the IP should be liable for any tax liability incurred for realising that asset. The same applies where CGT arises as a result of the sale of an asset to fund an IVA and the IP must pay the CGT as a cost of the arrangement.
I am also not a tax expert and this is only my opinion.
Yep - got that now from the other post on this which makes this issue clearer.
I agree with the principle that the IP must account for the tax, but I would probably pay it directly to my client than to HMRC. I am going to seek specific advice on this as it is not something I had considered until now.
