Questions of Cash: Greek tragedy about vanishing airline has left us high and dry

Q. I booked two return flights in June 2011 to Athens, flying from Gatwick. My husband and I used HSBC Visa debit cards, booking through the Netflights website to fly via Hellenic Air out on 21 July 2011, returning 29 July. Each return flight cost £152 plus £12 tax. We arrived from Edinburgh at Gatwick airport to find our flight had been cancelled.

We had heard nothing from Netflights or Hellenic Air. Netflights says it left a voice message on my husband's mobile on 8 July, but we did not receive this. We waited more than seven hours at Gatwick while a very helpful lady at the airport secured a flight on Alitalia from Heathrow to Athens, via Rome. We arrived in Athens more than eight hours late and lost our hotel booking, despite the hotel promising our room would be kept for us. We were then assured by Netflights and Hellenic Air that we would fly back on 29 July with Aegean Air.

When we arrived at Athens airport for our return flight we found we had not been booked on that flight, or any other flight. We eventually managed to obtain a BA flight to Glasgow. Staff at Athens airport told us it was useless trying to get a refund as Hellenic Air had ceased trading and on return I found I was pregnant, so had other things on my mind. Now I wonder if we are entitled to a refund. I have been unable to contact Hellenic Air, though it still has a website, and Netflights claims it is not liable as it was a flight-only booking. RM, Edinburgh.

A. Had you contacted us immediately we might have been able to recover your loss, but the two-year delay created an impossible hurdle. It may have been possible to obtain a chargeback from HSBC as you paid by Visa debit card, but you are now out of time. HSBC warns that this might anyway have been unsuccessful as Netflights could claim it fulfilled the order and therefore was not liable for any loss. Netflights confirms that as it was booking only flights, rather than an inclusive holiday, it was not liable for your loss.

A spokesman for Netflights says: "On 7 July 2011 Hellenic Imperial Airways announced the cancellation of all flights between Athens and London Gatwick and Kuwait. The airline advised that affected passengers would be re-protected onto an alternative airline (in this case, Aegean Airlines) or issued with a full refund.

"Netflights.com had clients on approximately 150 bookings affected by the cancellations, all of whom were contacted to explain the situation. Those not available when initially called were left messages to contact us as soon as possible to discuss their booking. Customers wishing to accept the alternative flights were asked to contact Hellenic Airways to discuss this as the airline was to handle the changes. The vast majority of our clients affected accepted a refund and made alternative arrangements either with ourselves or another operator/airline."

According to Netflights' records your husband was contacted, although, it says, it is unclear whether he was spoken to, or just had a message left on his voicemail.

The Association of British Travel Agents clarified the responsibilities of an agent. "The customer's contract is with the airline not with the agent and so the agent is not liable for anything," said Daisy Parker of ABTA. "ABTA has been calling for the Government to extend Air Travel Organisers' Licence protection [operated by the Civil Aviation Authority] to include airlines, as currently there is no legal requirement for them to provide protection against this kind of situation."

We attempted to contact Hellenic Air, but the Athens phone number on its website was not answered, emails bounced and the UK phone number was answered by another airline, which said it had no connection with Hellenic. The person who answered the phone said she understood Hellenic still operates local flights in Greece. However, our searches could not find any evidence of this and the airline is not shown as operating scheduled flights at the main Greek airports.

The Civil Aviation Authority contacted its Greek counterparts several times on our behalf to establish whether the airline is still operating, but without obtaining an answer and so concluded that Hellenic is probably no longer trading. The CAA has a division that processes compensation claims, but these are passed on to the airline to pay. A CAA spokesman explains: "If an airline is obliged under EC Regulation 261 to compensate/refund passengers for delayed or cancelled flights and refuses to do so then the CAA will mediate on behalf of the passenger with the airline. In the case of Hellenic Airways we have been unable to make contact with the airline to begin mediation as they appear to have ceased trading."

Q. I am retired and my only tax-free income is my state pension of £50 a week. Two years ago HMRC told me I could register to receive my savings gross of tax, up to my personal allowance. This year HMRC told me this advice was wrong. HMRC will now hang on to quite a lot of money for many months. Is there no way round this? SF, by email.

A. Not, it seems, in your circumstances. Receiving interest on savings gross of tax is not available where the interest takes a person above their tax-free allowance.

An HMRC spokesman explains: "This is all or nothing. If you are totally non taxable – income from all taxable sources – then you can complete the R85 and have interest paid gross.

"If you are taxable, even on only a small percentage of that income, then you can't and you have to wait for the end of the year and claim back tax then [on an R40]."

Guidance is published on the HMRC website, at hmrc.gov.uk.

Questions of Cash cannot give individual advice. But if you have a financial dilemma, we'll do our best to help. Please email us at: questionsofcash@independent.co.uk