Banks who fail the form guide

As the perpetually frustrated Victor Meldrew would say: "I don't believe it!". The big high street banks are routinely giving out false information about how to claim back tax on savings, according to a Jobs & Money survey this week.

Non-taxpayers, such as the retired, should not be paying tax on interest earned on their bank accounts. By getting one simple form, an IR85, from their bank, filling it in and sending it back to the bank to be checked and forwarded to the Inland Revenue, they can tell the taxman not to deduct tax.

It sounds easy enough yet, during a random survey by Jobs & Money of major banks, only one - the Abbey National - provided an up-to-date, clearly laid-out form with advice on how to proceed with the application.

Lloyds TSB, Royal Bank of Scotland, Barclays and NatWest all failed to provide up-to-date forms. The most recent one was from 1999. NatWest's form was a staggering four years out of date and HSBC gave the wrong form entirely.

All the bank staff contacted by us knew what an IR85 form was, ruffled around in a drawer or cupboard to find it and handed it over with a smile. But only Abbey, which produces its own tailor-made, easy to understand version, offered anything resembling advice.

The Inland Revenue estimates that up to 4m savers are paying unnecessary tax totalling around £300m each year. Up to 1.5m pensioners overpay tax on savings to the tune of £100m. Reasons for non-payment can include apathy, thinking it's not worth the hassle, or a lack of awareness of entitlement to claim tax back.

Banks are under no obligation to keep IR85 forms but say they see it as a part of customer service. HSBC says all applications for accounts with the bank clearly inform customers to pick up a form if they are a non-taxpayer.

A spokesman said: "Each branch stocks the forms and when applying for an account, people are made aware that they should pick up a form if they shouldn't be paying tax on their interest.

"I can only apologise if one of our branches gave out the wrong form. That is embarrassing and shouldn't ever happen. We will look into this."

NatWest said: "It is unfortunate that you went to the one branch that only had one form and that it was a 1997 form. Unfortunately, some stocks will run out occasionally. There can be a lot of administration."

He added: "It is more likely our branches would have 1999 forms and it would be very strange if the Inland Revenue did not accept them. Admittedly, the 1999 form is probably easier to understand than older ones."

Lloyds TSB said branches should have "valid" forms in stock. A spokesman said: "Branches should be able to help customers fill in the forms."

A spokesman for the Inland Revenue said IR85 forms are reprinted every year and "substantial" changes may sometimes be made to them - for example, changes to tax allowance thresholds. "Because changes are made sometimes," he said, "it's always best to have the most up to date."

He added that older forms would be accepted but "these could cause us problems if they are significantly different from the current form. "We rely on the banks coming to us and telling us that they need more forms or new ones. But they are probably likely to be less careful about updating our forms than they would be with their own. This may explain why they don't always have the most up to date."

The Revenue says it is impossible to inform every non-taxpayer that they should be checking for overpayment and banks are under no obligation to inform them, either. It has run advertising campaigns encouraging non-taxpayers to make sure they are paid gross interest on savings. The number of people overpaying dropped as a result: "We can't put a figure on it, but we have seen improvements."

Local tax offices stock the most recent IR85 forms, as well as leaflets explaining them. They also stock IR40 forms, which are used to claim tax owed on savings from previous tax years. You can download the forms at www.inlandrevenue.gov.uk.