An IFA firm has issued a formal complaint to US life insurance giant The Hartford over the incorrect tax treatment of clients who have annuities with its UK subsidiary Hartford Life.
The issue has raised concerns about The Hartford's commitment to the UK market after shutting its UK operations to new business last May.
Its tax code errors resulted in one client of Northampton-based firm Kingston PTM paying basic rate tax on annuity income, when HM Revenue and Customs (HMRC) confirmed no tax payments were owed.
Another customer, to whom a basic tax rate should have been applied, was not charged at all.
Kingston PTM company secretary Sam Caunt says the firm had great difficulty getting hold of anyone at The Hartford's Dublin operation to solve the problem, claiming call centre staff gave inconsistent and incorrect information.
"Trying to get this resolved has caused us enormous trouble, a formal complaint to Hartford and two unhappy clients - note that they are unhappy with Hartford, not us," he says.
The Hartford, which shut its UK operations as a result of the financial crisis, says it "regretted" the inconvenience caused but denies the error was a result of a lack of commitment to its UK customer base.
"While The Hartford no longer sells annuity products in the UK, we remain committed to honoring all of our policyholder obligations and believe that we have the resources in place to do so," says Alastair Murray, customer service and operations director at The Hartford - UK.
"As you would expect, we have taken steps to ensure that the mistakes we made last year will not be repeated in 2010," he adds.
The Hartford said an internal investigation with its third-party payment administrator confirmed the life insurance company "provided pension payments to the client based on the wrong tax code".
The investigation also found a call center employee provided Kingston PTM with incorrect advice for resolving the error.
Murray says: "While we certainly regret that we made a mistake that inconvenienced our policyholder, it is important to note that The Hartford processed more than 15,000 policyholder income payments last year and that the Kingston PTM complaint was one of just two tax-coding errors we made in all of 2009."
The Hartford's UK business consists of about 18,000 life and pensions policies and £1.2bn of assets under management, all serviced from Dublin.
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