Cashed in AVC - insurance company charged too little USC

[scan]

March 2015 cashed in policy for 81000 paid 32000 tax and 2800 usc all done by the insurance company, now tax man say that I have to pay 3300 more usc because the insurance company made a mistake,

 

[Jon Snow]

What is your question?

 

[scan]

do I have to pay, it was the insurance company that made the mistake.

 

[vandriver]

The insurance company for whatever reason appear to have paid the 3.5 % USC rate.You are liable to the 8% rate on most of it.
I'd say paying up is the only solution.

 

[Jon Snow]

do I have to pay, it was the insurance company that made the mistake.

The insurance company were paying you X amount of money, and they should have stopped 8% of it. They didn't and you ended up with too much money. Why should they pay your tax for you, you're no worse off for having to give it to Revenue now, than if the insurance company had stopped the money at day 1.

 

[moneybox]

Scan - what sort of policy was it, between the tax and the usc charges you have lost nearly 50% of the total sum. It would make one wonder whether its feasable paying into these policies over many years when the taxman takes such a huge sum at the end of the term.

 

[thedaddyman]

you have the tax liability and are required to pay it, not the insurance company. However you probably also have a case for a complaint against the insurance company for the issues in sorting out your tax affairs as a result of their error, any back interest you have to pay the taxman and potentially for any financial difficulties this has caused you.

 

[scan]

Scan - what sort of policy was it, between the tax and the usc charges you have lost nearly 50% of the total sum. It would make one wonder whether its feasable paying into these policies over many years when the taxman takes such a huge sum at the end of the term.

It was avc that I paid to up my Pension , when I retired I was told that I had to invest it,

 

[scan]

you have the tax liability and are required to pay it, not the insurance company. However you probably also have a case for a complaint against the insurance company for the issues in sorting out your tax affairs as a result of their error, any back interest you have to pay the taxman and potentially for any financial difficulties this has caused you.

I have always paid my tax, and when I cashed in my policy I paid my tax. But the insurance company or the tax man made the cock up,and way should I have to pay for there mistake.

 

[scan]

The insurance company for whatever reason appear to have paid the 3.5 % USC rate.You are liable to the 8% rate on most of it.
I'd say paying up is the only solution.

I think we have

The insurance company for whatever reason appear to have paid the 3.5 % USC rate.You are liable to the 8% rate on most of it.
I'd say paying up is the only solution.

I think we have paid far to much For people mistakes over the last ten years it is time to call stop.

 

[Jon Snow]

I have always paid my tax, and when I cashed in my policy I paid my tax. But the insurance company or the tax man made the cock up,and way should I have to pay for there mistake.

You're not looking at this correctly. It's your tax. You received the money without the full tax having been deducted. It can't fall to someone else to pay your tax for you. You'd be unjustly enriched if you didn't have to pay it.

 

[scan]

You're not looking at this correctly. It's your tax. You received the money without the full tax having been deducted. It can't fall to someone else to pay your tax for you. You'd be unjustly enriched if you didn't have to pay it.

Your are not looking at this correctly. If the insurance company gave me my 81000 the tax would be paid the right way. It was I that told the tax man and the in insurance company 12 months later when I discovered there mistake. if I did notified it could go on for years and my family would be in trouble. Because of mistake by the tax man and insurance company.

 

[Jon Snow]

Your are not looking at this correctly. If the insurance company gave me my 81000 the tax would be paid the right way. It was I that told the tax man and the in insurance company 12 months later when I discovered there mistake. if I did notified it could go on for years and my family would be in trouble. Because of mistake by the tax man and insurance company.

You're contradicting your original post there. You said the tax man are telling you that you owe an extra 3300.

Now you're saying you told them.

Which is it?

 

[scan]

Both. When I sent my medical receipts to my accountant he discovered the mistake and told me to get on to my insurance company.
When I was talking to Tom the insurance man on the phone he put me on to revenue,I do not think Tom should have done that as it was a private phone call to the insurance company [I think he was trying to scare me] that is how I told the revenue. Next day I got a email from revenue saying that I have to pay 3300.

 

[Joe_90]

Both. When I sent my medical receipts to my accountant he discovered the mistake and told me to get on to my insurance company.
When I was talking to Tom the insurance man on the phone he put me on to revenue,I do not think Tom should have done that as it was a private phone call to the insurance company [I think he was trying to scare me] that is how I told the revenue. Next day I got a email from revenue saying that I have to pay 3300.

I find this very strange.

The insurance company deducted the wrong rate of USC for whatever reason.

Did your financial advisor not advise you that they would be deducting 40% Income Tax and 8% USC (on an emergency tax basis) before you drew it down?

What did your accountant think the insurance company was going to do? You owed 7% USC on it, you still owe 7%. The fact that the insurance company did not deduct the correct amount of USC has not increased your liability.

How did Tom put you onto the Revenue? What do you mean he was trying to scare you? Normally it takes a long time to get to talk to someone in the Revenue. What did they say to you?

I assume that you have claimed your tax free lump sum etc. previously.

Has your accountant submitted your tax return for 2015? That's normally the way Revenue calculate if you have a liability, they don't usually send an email saying you owe us €3,300.

For example if your other income does not use up your entire standard rate band and you have 40% deducted from your lump sum then you are entitled to a refund.