ASK TONY: Why is my pension tax bill riddle so difficult to solve?

After my husband died in 2016, I received part of his pension — £2,532.56 per year. Before this, my pensions were very small, so I had not paid tax since I retired. I am now 87. 

I have recently received four documents from HMRC for previous tax years. For the tax year to April 2017 there is a refund of £10.13. For 2018 it says I owe £57.40. In 2019 there is a refund of £23.16 with a cheque enclosed, which I have not cashed. For the year to April 2020 it says I owe £259. 

HMRC says I need to pay both the amounts owing, and that my pension provider has been using the wrong tax code. I asked if HMRC could tell the pension provider directly, but was told it cannot do this. 

The pension firm says it used the code given by HMRC and is not allowed to contact the taxman to query this. 

J. S., by email. 

There is something fundamentally wrong with a tax system that can leave Money Mail, October 21 you have your say an 87-year-old being batted backwards and forwards by HMRC and pension scheme trustees. 

The fact that both parties will not talk to each other, even after you have given them permission, is another example of how data protection is too often used as an excuse for inaction. 

HMRC maintains the tax codes supplied to the pension firm have not been correctly applied. But even this does not explain the £259 bill. 

Last year, supposedly a tax code of 123T was used rather than 91T. If it were as simple as this you would owe £64 as a basic-rate taxpayer, not £259. 

The good news is that HMRC says this is an employer error, so the £259, which you have already paid, will be refunded. You can also cash your rebate cheques.

On August 1, an Apple iPhone 11 Pro Max, which I had not ordered, was delivered by O2. 

An hour later, someone arrived claiming it was delivered to the wrong address. I refused to hand it over. 

I phoned O2 and was told this would be reported to the fraud department and I would hear more within five to ten days. On August 4, I received a welcome letter from O2, notifying me that I would pay £61.46 monthly. I tried calling the firm but could not get through. 

On August 18, I spoke to an O2 agent online, but they could not help. 

On August 25, I went to the O2 store in Lakeside shopping centre in Thurrock, Essex, with the phone and paperwork. I was told there was nothing it could do. I have now received two letters from O2 claiming I am in default.

H. M., Harold Wood, London.

Money Mail has highlighted the collapse in customer service in recent months. It is unacceptable for O2 to send debt letters when you have done your utmost to solve its fraud problem. 

It seems that your issue was not escalated to fraud handlers. And the couldn’t-care-less attitude of the store you visited suggests there is something amiss with staff training. This phone account has now been disconnected, you have been paid £100 compensation and your credit file has been cleared. An O2 spokesman says: ‘We’ve fed back internally to the team involved, to ensure proper process is followed at all times.’ 

O2 also says it ‘takes fraud, and the security of its customers, extremely seriously’. Perhaps it should tell its Lakeside store.

In 1999, a financial adviser suggested that, at the age of 63, I take a Skandia life insurance plan at £50 per month for nearly £32,000 of cover. 

The premiums have risen and now I have the choice of paying £610 per month (a third of my monthly income) or cutting the cover to £21,000. I have so far paid £34,000 and the surrender value is only £1,322. 

I wrote to ReAssure, which now runs these policies, to say I could not afford to pay any more. I’ve had a four-page reply which says the cover can drop to around £11,000 but no further. 

N. M., Abbotsbury, Dorset 

Whole-of-life policies are one of the ugliest products devised by the insurance industry. Financial advisers benefited from obscene commission payments and flogged them willy-nilly. In contrast, ordinary-term life insurance, which pays only within a specific timescale — say, 30 years — offers cheap, good-value protection for families. 

The selling point of whole-of-life insurance was that it would pay out whenever you die, supposedly by mixing insurance with some investment. 

The harsh reality is that whole-of-life premiums can rise until they become unaffordable, the life cover can be cut harshly and, with some specific exceptions, the only customers who ‘benefit’ are those who pop their clogs fairly soon after buying it. 

Commission was paid to your financial adviser at the outset, and to the registered adviser every time the premium increased. 

Your decision now will depend on your health. I think that anyone who wants to provide for loved ones in later life would usually do better to invest their money. Or you could use the £610 you’d spend on the policy each month to enjoy life with them now. 

The firm which sold the policy is no longer authorised by the Financial Conduct Authority, so if you feel you were mis-sold it you will need to contact the Financial Services Compensation Scheme on 0800 678 1100.

 Straight to the Point

For the past eight months, PayPal has been holding £62.59 of my money. Apparently this is due to a lack of activity on my account, although I have sold items recently. PayPal has offered no solution. 

D. H., by email 

Paypal blamed the issue on a technical problem and has now released the funds. It has also made a goodwill payment of £100. 

One of my John Lewis paper vouchers was damaged and I wasn’t able to use it as the code couldn’t be read. The store promised to send me a new voucher, but that was two months ago. 

T. H., Leicester. 

You should have received your new voucher by now. Unfortunately, you contacted the wrong department, as it is John Lewis’s financial services team which deals with the paper vouchers earned through its partnership scheme. It has updated its website to make this clearer.

Virgin Media rang to see if I wanted to upgrade my package for an extra £5 a month, but when I received my contract I saw that my monthly bill would rise from £38 to £83 within six months. I’ve repeatedly asked to cancel but I’m still being chased for payments. 

C. W., by email.

Virgin Media has now cancelled your contract and wiped all charges from your account. You were offered £45 as a goodwill gesture, plus a further £76, the equivalent of two months’ worth of bills. But you decided this was not enough, took your case to the Communication and Internet Services Adjudication Scheme and were awarded £400.

When I visited Costa in the Waverley Mall in Edinburgh last month, I was asked to check in via the Test and Trace app on my smartphone. When I said I didn’t have a smartphone, I was told I could only have a takeaway coffee. Is this correct? 

W. W., Edinburgh.

Costa says that its staff would usually input your details on a laptop if you did not have a smartphone, but the store was having IT issues when you visited. If this happens again, Costa said it would just take down your information in writing. It will be getting in touch to apologise.         

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