a The independent film producer whose VAT deduction of £2,765 was paid into a bank account he closed 16 years ago described his battle to get his money back after the account number was recycled by Barclays and the cash was not returned by the new owner.
Chris McBride, who lives in Penzance, has been trying to get his money back since May, but HMRC and Barclays insist the other side’s problem must be resolved.
McBride says Barclays employees were excited when he complained, telling him bank account numbers were allowed to be recycled and he would have known this “if he had read the terms and conditions”.
It turned out that in 2008 Barclays had given a new customer the same account number and sort code that the product had shut down in 2006. After writing to the new account owner — who failed to respond — the bank closed the complaint.
For its part, HMRC apparently did not match the account name with the recipient of the refund, a check that would have stopped the erroneous transfer. In 2020, HMRC confirmed to Guardian Money that it was taking steps to stop this type of thing from happening.
The case raises the question of why banks reuse account and count code numbers.
“The whole affair is absurd, and now I’m at a loss as to how to get my money back,” McBride says. “In 2004, my accountant put me on a flat-rate VAT regime, and two years later I switched my bank account from Barclays to First Direct. I’ve made countless payments to HMRC from my First Direct account since then.”
However, when Covid shut down the film industry, McBride was told that for the first time in 16 years he was due a VAT deduction.
Suppose it will be paid in the same way as the tax deduction. When he realized he had not received the £2,765, his accountant chased after him. It turns out that HMRC kept his old details on its VAT system and paid the money in several installments into his closed account.
“Since then I’ve spent hours on the phone,” he says. “Someone at HMRC told me they would be writing to Barclays to ask them to contact the new account holder. That was my last bit of good news.
“When the new account holder failed to respond, Barclays simply closed the case. Its position is that this is all my fault for not telling HMRC. I had assumed the closed account was that — closed — but apparently it wasn’t.”
After a series of such cases, some banks, including Nationwide, changed their terms and conditions to allow employees to recover payments that were deposited into the wrong account. Had Barclays done the same he would have been able to get McBride’s money back.
The case is similar to that of Peter Tesch, who lost an inheritance of £193,000 after it was mistakenly paid into another Barclays account with an account number nearly identical to his own. He fought a costly legal battle to get his money back.
Barclays said it followed McBride’s instructions to close his account in August 2006. “Barclays received funds between 2019 and 2022 sent by HMRC that were applied to the directed account using the sort code and account number as a unique identifier,” says a Barclays spokesperson.
“Once we were alerted that the funds had not been sent to the intended account, we acted to recover the funds but this action was not successful. We have advised our clients that there was no bank error and the matter should be referred to HMRC.”
HMRC says it made the payments into the bank account it holds for McBride. However, it adds: “In an effort to assist the client, we have submitted a request to Barclays for a refund.”
This leaves McBride at a standstill. He can pursue the case through the courts but the costs involved are likely to be prohibitive. “What is troubling is the fact that the person who receives the money can take it without fear of prosecution because the bank is protecting their identity,” he adds.