Not upheld: pension withdrawal tax reporting and calculation complaint against Scottish Widows Limited trading as Clerical Medical

Decision detail

Summary

Mrs F complained that Clerical Medical provided incorrect information to HMRC regarding her pension withdrawal, resulting in overpayment of tax. She received £37,389.32 from Clerical Medical and a £10,823 tax refund from HMRC, but believed she was owed an additional £5,776.02 to reach her full fund value of £53,988.92. The ombudsman found that Clerical Medical correctly reported the withdrawal to HMRC using the standard emergency tax code and that the full fund value was properly distributed between tax paid to HMRC and payment to Mrs F. The ombudsman determined that tax reconciliation is HMRC's responsibility and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman determined that Clerical Medical's role was limited to deducting tax according to HMRC's rules and reporting the withdrawal correctly to HMRC. The firm correctly reported the fund value minus the tax-free amount to HMRC and used the appropriate emergency tax code as required by HMRC. The full fund value was paid out—part to HMRC as tax and part to Mrs F—so Clerical Medical retained nothing. The calculation of correct tax liability and any refund due is HMRC's responsibility, not Clerical Medical's.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website