Questions of Cash: December 2015

Posted on December 31, 2015 · Posted in The Independent

Q. I recently requested the transfer of my ISA from Barclays Bank to Virgin Media. I have been unable to obtain confirmation that the transfer has been made, or what my balance is. Each bank has told me on the phone that the other has the money. I am losing interest on my savings and this is taking up my valuable time. I fear that a fraud has taken place. FT, Manchester.

A. The good news is that the problem was an administrative mix-up, not fraud. We contacted both Virgin Money and Barclays to resolve the issues. A spokesman for Virgin Money says: “Whilst we are sorry for any inconvenience caused to the customer, as the receiving party in this case Virgin Money does not feel it is at fault for the protracted transfer of funds process. We did not receive the transfer of ISA funds [for 20 days], due to an error with the customer’s national insurance number. That said, and once corrected and once the funds were received, as a gesture of goodwill we immediately backdated the interest on the customer’s account to 2 October 2015 [the intended date of transfer] to ensure they did not suffer any loss of interest.” Virgin Money advise the amount transferred from Barclays was £23,423.45. A spokesman for Barclays Bank says: “Having completed a further investigation we have established that an error [was] made when releasing the funds to Virgin Money and the funds were not automatically transferred. As a result a cheque was sent to Virgin Money on 15 October, together with 8 per cent compensatory interest for the period 2 to 23 October totalling £90.35. An offer of £100 gesture of goodwill has also been made for the inconvenience caused.” You tell us you are content with the financial settlement from Barclays.

Q. I recently made an online order via credit card for Ugg boots from Australia AB Ugg Boots, which has an Australian internet domain address. The advertised price, with shipping included, was £64.99. But my account was debited by £67.63, billed initially in the Chinese currency. The ‘transaction fee’ charged by Visa for this exchange was £2.02. I have now been told the boots are unavailable and that a refund of £64.99 will be paid – which I have not yet received. LB, Pembrokeshire.

A. As your payment was made by Visa credit card we contacted your card issuer, HSBC, to request a chargeback for the full payment amount. It then contacted you to say that the £64.99 had been credited and it will make up the difference – so you are not out of pocket. We contacted Australia AB Ugg Boots, whose spokeswoman said: “The extra price has nothing to do with the merchant. Causes of price difference are cross-border fee of international transaction and currency exchange rates. Hope you can understand.” While this problem is now resolved and this trader has acted correctly, we would suggest readers exercise caution in the online purchase of what are described as ‘Australian Ugg boots’. There have been a number of reported scams related to this trade, often involving the sale of poor quality items.

Q. We are considering paying for the Contributory Parent Visa to migrate to Australia to be with our family.  I was previously told I could transfer my personal pension to Australia, which would then not be liable for UK tax on the total amount upon transfer.  I have a personal pension (SIPP) and already taken the UK 25 per cent lump sum four years ago.  I have not bought an annuity and have not drawn any monthly income, so the remaining 75 per cent is still invested.  If I became an Australian resident can I transfer the balance of my SIPP without paying UK tax when I transfer it?  Is it liable, after transfer, to Australian tax when I draw on it?  Do I need to hold the funds in an Australian pension scheme?  Do I need to live there for six months before I can draw on it?  If so, would it matter that I am using the contributory visa, where you effectively pay half the money to migrate for two years, then upgrading to full residency and paying the remaining half fee?  PJ, by email.

A. Stephen Humphreys, a wealth management partner at accountants Moore Stephens, says it is possible to transfer your UK SIPP to Australia, even though you have taken the lump sum. He explains: “The transfer must be made to a Qualifying Recognised Overseas Pension Scheme (QROPS), the only sticking point being that many Australian QROPS have recently been de-registered due to the fact that, in certain circumstances, they allowed people access pension benefits before the age of 55 which is the minimum age, other than for ill health, in the UK.  So providing you can find a suitable QROPS, you will be able to transfer your existing plan without any UK tax charges. There are limits to how much you can transfer and, currently, you can transfer AUS$180,000 (£86,120) p.a. with an initial AUS$540,000 (£258,370) (three years in advance) being possible until you are 65. After three years, you can then make further transfers of AUS$180,000 (£86,120) p.a. or the next three years in advance again. The six month rule is an Australian tax rule since, unlike UK pension funds, there is a 15 per cent tax charge on the growth within the pension fund in Australia. If you transfer your fund within the first six months of becoming resident in Australia, this tax charge is waived. If not, you will be liable to Australian tax on the growth in your UK pension fund for the period you were an Australian resident when you eventually transfer. The benefit, however, of the Australian pension system is that when you reach retirement age, you can take pension benefits free of tax in Australia even if this is the entire pension fund.”