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Financial institutions were involved in the misselling of interest rate hedging products or “swaps”. Compensation payments involve elements such as “basic redress”, “interest” and “consequential loss”
In common with many readers some of my clients have claims pending in respect of interest rate hedging products (IRHPs) – or “swaps” – taken out a few years ago.
They seem to come under the headings: redress with “basic redress” being the refund of the payments made under the IRHP (with possibly a deduction for an alternative product); “interest” (generally at 8%) to cover the finance cost of the payments; and possibly “consequential loss” if it can be demonstrated that the money would have been used more productively elsewhere.
I would think that at least the basic redress and interest elements would be taxable because the original payments and additional overdraft interest would have been tax-deductible.
However my clients seem to be of the opinion that the claim advisers are saying that these are not taxable.
It seems difficult to get definitive answers but the...
