Working Tax Credits & Bank Charges

[andrew1]

I was made aware that there was a possibility that if one is receiving Working Tax Credits then the bank should not be taking charges from those credits.

 

I have one particular account into which my Tax Credits are paid. The Tax Credit Act 2002 states:

 

 

Section .45 - Inalienability

(1) Every assignment of or ‘charge on a tax credit’, and every agreement to assign or charge a tax credit, is void; and, on the bankruptcy of a person entitled to a tax credit, the entitlement to the tax credit does not pass to any trustee or other person acting on behalf of his creditors.

 

Now reading this one might assume it has only to do with bankruptcy, but I was informed that this may not be the case. I wrote to my bank about this and heard nothing back (usual " you must wait 8 weeks" etc) So I rang them - 3 times and still nothing. The final chap in complaints said he wasn't sure and would follow it up but, "as a goodwill gesture" would refund a sizable chunk of the charges which he did immediately. Not all of them, but a large amount for the period I had been on WTC. Being a dedicated Cagger that was not enough and I wrote again asking them to do what was the law, not a 'goodwill gesture', I'm sick of their so called 'goodwill gestures' as they show little goodwill whatsoever given the years I'd been with them. Anyway, I eventually received a reply:

 

"Thank you for your letter dated 3 August 2007 regarding the fact that you feel the deductions from your account in respect of unauthorised overdrafts, unpaid items and paid items where funds are not available are illegal under the Tax Credit Act 2002 S.45.

I appreciate your taking the time to discuss your complaint with me on 12 October 2007.

You make the point in your letter that because the Working Tax Credit does not belong to the recipient, but to the state for the upkeep of the recipient any charges on your account cannot apply. You also feel that the knowledge of our staff in this regard is not adequate.

I note from our records that since you wrote your letter we have refunded £535 to your account. As this money is now in your account the issue of a refund is no longer in question but rather the legality of any deductions from your account made by the Bank....

 

In the course of my investigation I have consulted with our legal department who have confirmed that reference to “charge” within Section 45 of the Tax Credit Act does not mean a bank charge but rather a third party legal charge made over monies standing to the credit of the account. Section 45 further pays reference to “assignment” or “bankruptcy” and again these are not applicable in your particular case. This means that you are unable to rely on Section 45 of the Tax Credit Act 2002 or Section 187(1) of the Social Security Administration Act 1992 for the purpose of protecting tax credits in the manner suggested. I therefore regret to advise you that I cannot uphold your complaint. I appreciate you will be disappointed, but I hope this letter has helped you understand why I have reached this decision".

 

 

Does anyone know if this is in fact the right response?

 

Thanks

Sarah

[Bookworm]

“charge” within Section 45 of the Tax Credit Act does not mean a bank charge but rather a third party legal charge made over monies standing to the credit of the account.

 

Is that because THEIR charges are not legal then?

 

In all seriousness, I would query why they feel that their charges are any different from any other charge. Sounds like a load of guff to me.

[andrew1]

Is that because THEIR charges are not legal then?

 

In all seriousness, I would query why they feel that their charges are any different from any other charge. Sounds like a load of guff to me.

 

Thanks Bookie, an angel as usual! I'll do that, I think they've already got an idea I'm not too happy with the £4k bank charges as it is and their attitude, I came across some outfit called the Consumer Action Group and lent on them 'full blast' after finding CAG - they know but I was hoping someone might give me a nod on the legal position on these WTC's ... I think it was Sequenci who started me off on these, but I haven't seen him lately.

 

Trust you keep well anyway!

[make them aktiv runners]

This thread is mainly about child benefit, but WTC is also mentioned. Answers are what you expect - bank cannot take charges out of them.

http://www.consumeractiongroup.co.uk/forum/general-debt/114391-halifax-wont-let-me.html?highlight=child

[andrew1]

This thread is mainly about child benefit, but WTC is also mentioned. Answers are what you expect - bank cannot take charges out of them.

http://www.consumeractiongroup.co.uk/forum/general-debt/114391-halifax-wont-let-me.html?highlight=child

 

Thanks Aktiv, you're quite right but the bank have insisted that I cannot rely upon those Acts I want to be a true Cagger and Cabot Fan Clubber and point out the realities as I am prone to doing especially as far as Cabot are concerned!. I am seeking the balance of about £175 and I want them and their lawyers to eat their hats and words, I just need the polish to shine the argument...

[sequenci]

I think it was Sequenci who started me off on these, but I haven't seen him lately.

 

 

Hello, I'm only about a little bit for the next few weeks as I've a few things in personal life that need sorting. Also it's really busy in the day job so I can't sneak on that often. I'll try and take a look for you

[andrew1]

Hello, I'm only about a little bit for the next few weeks as I've a few things in personal life that need sorting. Also it's really busy in the day job so I can't sneak on that often. I'll try and take a look for you

 

Hey good luck with all that sequenci, don't worry about me, I'll get there, we have such strong support amongst us all.. you take care of your own , far more important. See you soon..

[Bookworm]

I was actually being serious (hard to believe, I know! )

 

Tax Credits Act 2002

 

Section 45: Inalienability

162. This section provides that the right to a tax credit cannot be assigned to any other person. This means that payments of tax credit are always directed to the person who is entitled to them and cannot be diverted, for example, to pay his or her creditors.

 

IMO, there is no way the legislation would make a difference between bank charges and other charges, which is why I suggest you get them to dig themselves that hole a little bit deeper to try and explain how and why they think it does!

[andrew1]

I was actually being serious (hard to believe, I know! )

 

Tax Credits Act 2002

 

 

 

IMO, there is no way the legislation would make a difference between bank charges and other charges, which is why I suggest you get them to dig themselves that hole a little bit deeper to try and explain how and why they think it does!

 

In true CAG style, will do Bookie, Thanks - I always take you seriously

[sequenci]

I've spoken to a pro in this area and he is in agreement with the claim from the bank. That a charge doesn't mean bank charge but a charge as in security.

 

interesting...

[Bookworm]

Interesting, but surely, unless the legislation itself specifies the meaning, this is only an interpretation?

 

The part I have quoted higher up is much more specific in stating that they can't be diverted to pay a creditor.

 

As you guys know, this isn't my field of expertise (yet to find out what is ), but it seems to me that if the interpretation given by the bank or Sequenci's pro is correct, there is only a very narrow window in which the rights to access to WTC would be inalienable, eg in the case of security, and that flies against the protection supposedly built-in which arose when WTC and other benefits were made to be paid into a bank account instead of in hand at the PO, if that makes sense.

 

[2p]

[sequenci]

Hmmm. most of the arguments I have found surround The Social Security Administration Act 1992. I'm going to try and do some more hunting.

[zootscoot]

A bank charge is not a charge in the legal sense. Charge here is simply another word for fee.

 

The Tax Credit Act and Social Security Administration Act have no application to bank charges.

[andrew1]

A bank charge is not a charge in the legal sense. Charge here is simply another word for fee.

 

The Tax Credit Act and Social Security Administration Act have no application to bank charges.

 

Meaning in laymans terms?

[zootscoot]

The charge referred to in the Acts relates to a legal charge as a way of attaching ownership rights eg when a creditor seeks to put a charge on your house, or an attachment to your earnings. Its a way of securing debts.

 

A bank charge is simply another word for a fee or a price. To say that banks are prevented from taking bank charges from your account under the TCA or the SSAA would be like saying that Tescos would have to allow those on benefits to walk off with their shopping because they are prevented from charging them for their shopping.

 

A bank charge does not attach ownership rights on any specified income. The banks do not need to create such legal charges as they have first dibs on whatever is placed into your account by contract.

 

It would be very nice if TCA and SSAA did have the effect of preventing bank charges but unfortunately they don't.