Banks, building societies, HMRC and their non-taxpaying customers - A plea for better service

Published on 21 January 2013

In June 2012 LITRG members carried out a mystery shopping exercise to test how well banks and building societies ensure their non-taxpaying customers can recover the tax deducted at source from their savings interest. This report sets out the disappointing results of that survey, and makes recommendations for banks, building societies and HMRC to improve their service.

Banks and building societies are obliged to deduct tax at 20% from savings interest before paying it to their investors. If the investors are non-taxpayers they can apply to have their savings income paid to them gross, using the form R85 paper procedure; but too many are unaware of this process and overpay tax. The situation of these individuals has been of concern to the LITRG since its formation in 1998, and we have repeatedly drawn HMRC’s attention to the problem. For their part HMRC have run a few ‘Taxback’ campaigns, encouraging savers who have already overpaid income tax to claim a repayment.

It would be preferable to prevent overpayment of tax in the first place, but this can only happen if the form R85 procedure is publicised and operated properly. To do so is the responsibility of HMRC along with banks and building societies. LITRG has conducted ‘mystery shopping’ exercises in the past to assess how well they perform this service to their low-income savers, with uniformly poor results. As there appeared to have been little improvement since our last such exercise in 2007, we decided to undertake a further mystery shop in 2012.

This report shows that in only five out of 52 attempts (either visiting bank and building society branches in person, or by visiting their websites) were our volunteers able to obtain all of the information they needed. It details our findings and consequent recommendations.

Read the full report.

A Large Type version is also available.

(21-01-2013)

Contact: Kelly Sizer (please use form at /contact-us)