Disproportionate bond gains
Sean_Fernyhough
Member
Has anyone been through the process of HMRC arriving at a conclusion that the gains on a bond are "wholly disproportionate"? I'm just wondering what the mechanics of its calculation is. From what I have read on some provider websites it isn't simply a case of doing a CEC "as if" segments were surrendered rather than a withdrawal across segments.
Also if HMRC does recalculate what impact does this have for future CECs for the bond?
Many thanks.
Comments
They can do what they like but this explains what they are likely to do - it's a bit like an OEIC surrender as opposed to just running based on full surrender.
https://www.gov.uk/hmrc-internal-manuals/insurance-policyholder-taxation-manual/iptm3596
As a coda to this, I thought I'd write up what happened in this case once we applied to the HMRC in case it's of help to other people.
The HMRC requested the following information:
1) full transaction history - premiums and withdrawals (including adviser and DFM charges)
2) a copy of the CEC showing the disproportionate gain.
The reply then came back agreeing the gain was "wholly disproportionate", indicated that they had recalculated the gain down to £1,882 from £158,800. There's no indication of the detail of the calculation.
The process took less than 3 weeks from application to the decision.
Thanks
HI, did they give any indication of what the procedure would be for future gains on the policy?
I've directed that question to the product provider and the first time of asking it was clear the question flew over their heads - I am awaiting a response to a second attempt. It sounds as though directing the enquiry back to HMRC may be better?
There is just a reference to IPTM3596 in the recalculation notice - and that puts the onus on the client rather than the bond provider.
I suspect / logic dictates that you'll need to contact HMRC to sort out a suitable gain figure every time there is an event.
But not had that definitively from anywhere