Partially upheld: Processing error and failure to communicate limitations on future-dated instructions; capital gains tax base cost determination complaint against Financial Administration Services Limited (FASL)

Decision detail

Summary

Mr A complained that FASL incorrectly processed an instruction to transfer investments from his late father's continuing ISA, executing it immediately in November 2024 instead of on the third anniversary of death (21 January 2025). This early transfer resulted in a lower market value for the investments, potentially affecting Mr A's capital gains tax position as a beneficiary. FASL acknowledged the error and paid £450 compensation but declined to compensate for potential CGT liability, arguing it was an execution-only service. The ombudsman partially upheld the complaint, finding that while FASL erred, the correct base cost for CGT purposes should be the market value on the intended transfer date per HMRC guidance, and that Mr A as taxpayer is responsible for reporting his position to HMRC. The ombudsman ordered an additional £200 compensation for distress and inconvenience caused by poor communication about the base cost issue.

The Ombudsman's reasoning

The ombudsman found that while FASL made an error in processing the instruction early, the appropriate base cost for CGT purposes is the market value on the date the transfer should have occurred (21 January 2025), not the actual transfer date. FASL's responsibility was limited to providing accurate factual information about investment values at relevant dates, which it did. Mr A, as the taxpayer, is responsible for determining and reporting his tax position to HMRC in accordance with applicable rules. The ombudsman rejected the suggestion that requiring use of the correct base cost would involve providing false information to HMRC, as HMRC guidance supports using the intended transfer date value. However, the ombudsman acknowledged that FASL's error and poor communication about the base cost issue caused understandable confusion and distress.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website