Four thousand Irish shareholders in Standard Life have been left with a tax bill because letters got lost in the mail.
The UK-listed insurer has been returning money to shareholders after selling its business in Canada for £2.2 billion last September.
It is paying 73 pence sterling, or just over €1, for every share in the company they held on March 16th last. The company has roughly 60,000 shareholders in Ireland, with the average Irish holding being 675 shares, although some hold many more.
Special dividend
Shareholders had a choice of receiving money by way of a special dividend or as a capital payment. The dividend was the default option but in almost all cases, it made more sense for small Irish shareholders to elect to receive the money as capital. To do so, they had to inform the company of their preference by March 18th last.
The average payment of €680 would be within the annual exemption for capital gains meaning no tax is due, while the special dividend could see up to 52 per cent of the payment going in income tax, Universal Social Charge and PRSI.
Cumulatively, that could mean Irish investors paying close to €1.3 million in tax unnecessarily.
A number of Irish shareholders have complained that they notified the company weeks ahead of the deadline of their choice but discovered this had been ignored. Many said they had been stonewalled by Standard Life when they rang to challenge the method of payment.
Now the company has admitted that the responses of about 4,000 Irish shareholders were unnecessarily delayed. In response to queries from The Irish Times, a spokeswoman said a large amount of mail from Republic arrived after the Easter bank holiday weekend "between the 7th and 9th of April".
“On reviewing these forms . . . it appears something has happened in the postal system and, as a result, the forms of about 4,000 of our Irish shareholders electing a capital option arrived well after the due date, despite them being mailed to us on time,” she said.
Standard Life says it is currently in discussions with the Royal Mail and An Post to seek an explanation.
A spokeswoman said the company would be writing individually to all the shareholders affected but would not be able to revisit the method of payment already issued.
However, she said the company intended to contact the Irish Revenue Commissioners to explain what had happened.
