Questions of cash: I won bumper payout after HMRC battle exposed case of bad advice
Friday 28 June 2013
Q. HMRC tells me I must pay tax on the nominal profits on a land investment, from which I have never seen any cash profits. In early 2000 I lost my job due to injury and received a lump sum. I went to the accountancy firm BDO Northern Ireland, which advised me to put £25,000 into a joint-property investment with some of their other clients. I found out years later that our lump sums were topped-up through mortgage borrowing.
In the early years, the scheme made a nominal profit, which is why HMRC is asking for payments of tax of £2,200 – which I don't have and can't afford to pay. My intention was that the proceeds of the investments would be used to support my daughters at university. But there are no profits now that Northern Ireland's severe property crash has destroyed the value of the investment. Can you ask HMRC to recognise that I made a loss, not a profit? EW, County Down.
A. We approached HMRC, but it did not respond. However, it seemed to us that the bigger question was why BDO Northern Ireland, a leading firm of accountants and financial advisers, should propose that you invest in a property deal that was speculative, high-risk and did not appear to fit with your risk profile or financial objectives. We put this view to BDO NI, which then entered into protracted discussions with you. These did not seem to us to be leading to a satisfactory offer from BDO NI.
We therefore asked financial advisers Hargreaves Lansdown for its view of what would be an appropriate settlement in the circumstances. It calculated that, had the funds been placed in a low-risk investment, earning base rate plus one per cent over the period of the term, your investment would now be worth £35,367.68. We also discussed the matter with the Financial Ombudsman Service, which told us that, assuming it upheld your complaint, it would consider your risk profile. It might also decide the settlement should be based on the likely return from a stock-market investment. Given the volatility of stock markets it is very difficult for us to conclude whether this would have generated a higher or lower return than the simpler approach of base rate plus one per cent.
You remain liable for the £2,200 tax bill on the original property investment, so it is important that the settlement does not lead to an additional tax liability for you. A spokesman for BDO Northern Ireland said: "On receipt of a query from [the reader] we undertook to examine the issue in full and to work with our client in resolving this matter. We have now concluded that process in a matter deemed satisfactory to both parties. We are not in a position to disclose the full terms of the settlement of this issue." We told you that we believe the settlement should not be less than £35,000. Due to a confidentiality clause, you are unable to tell us the figure you settled at – but you say you are "very happy" with the outcome.
Q. I have continued problems with my Danske Bank telephone-banking service. Danske Bank insists the problem is with my line, but BT cannot find a fault. I can access the service from other land lines, so the bank seems to be correct. I am reluctant to use my mobile phone as the service uses an 0845 number, which is very expensive. AH, Lisburn.
A. The fault has now been fixed, so you can now use the telephone banking service from home. BT's spokesman says: "This was an unusual fault that wasn't picked up by our remote testing and was just affecting this particular number. This is why the customer was initially asked to contact her bank so that they could test their equipment. The Openreach engineer who investigated updated the connection at the customer's property, but found the main problem was a fault in the exchange, which he rectified."
Q. I flew with Virgin Atlantic earlier this year on my honeymoon. A security tag was attached to the outside of my passport at Virgin Atlantic's check-in desk. When I returned home I tried to remove the sticker and was unable to do so. I phoned Virgin Atlantic and was advised to use nail varnish to remove it. This just damaged my passport by leaving a striped mark on the back page and a dent on the inside back page. I emailed Virgin Atlantic six times asking them to pay £103 for a fast-track service from the Passport Office to replace my damaged passport. I have not been successful. This has been going on for several weeks and I cannot allow this to go on any longer as I am travelling abroad in July. MV, by email.
A. A spokeswoman for Virgin Atlantic says: "As a gesture of goodwill, we will reimburse her the full amount to replace her passport." You have now received £128, covering the cost of the Passport Office Premium service.
Q. My friend travelled home for his brother's funeral and hired a car from Hertz at the airport. He was charged for "extra insurance", though he said no when asked if he wanted any. Hertz says he signed for the extra insurance and so was charged for it. LS, by email.
A. Hertz has produced screen shots of the booking forms showing your friend initialled the "super cover (zero-excess) insurance" option. It adds that he was served by an experienced staff member, who has not been the subject of a similar complaint. But Hertz accepts your friend was unaware what he was signing. As a result, and given that he was distressed at the time, Hertz has agreed to refund the zero-excess insurance premium and has repaid £117.72.
Questions of Cash cannot give individual advice. But if you have a financial dilemma, we'll do our best to help. Please email us at: email@example.com
Will your credit card rewards be scrapped following new EU rules on charges?
Crowd-to-let: How crowdfunding sites can give investors a slice of the property market for £500
Simon Read: 'Seven Families campaign offers an escape from financial and emotional distress'
General Election 2015: How you vote next week could affect your finances
Motorists will need a code to hire a car abroad
- 2 How the language you speak changes your view of the world
- 3 Russell Brand backs Ed Miliband: 'You gotta vote Labour'
- 4 General Election 2015: 14-year-old boy asks Nick Clegg – 'can you kill Katie Hopkins?'
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
Day In a Page
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park