Consequences of being naughty?

Naughty naughty!

You will get a letter from HMRC telling you not to do it again and reminding you of the rules.

They should let you keep the accounts provided you are not a serial offender. (I think everyone gets let off once, but I'm not sure.)

If both accounts are with the same provider, they will refund your last payments instead.

Coeus wrote: »

Does anyone know what would happen if one were to invest the full ISA allowance (£10,200) in a S&S ISA aswell as £5,100 in a cash ISA, totalling £15,300 invested in a single tax year?.

The oversubscription (ie the £5100 last subscribed) will be removed from the ISAs as soon as HMRC become aware of it from (assuming separate institutions) the ISA managers. The HMRC 'laissez faire' for first time offenders only extends to the maximum of the yearly ISA allowance.

HMRC guidance still shows the allowance value to 5.4.10 .... but this makes it clear what they will do :-

12.37 There are two situations in which excess subscriptions must be removed from an ISA. The first is where the investor subscribes to a valid combination of ISAs (one cash ISA and one stocks and shares ISA), but subscribes more than £7,200 in total.
For Example
Mrs Gray thinks she understands the ISA rules and opens two ISAs – one of each type - in April 2008.
• On 12 April she invests £2,000 in a cash ISA with manager A
• On 15 April she invests £5,000 in a stocks and shares ISA with manager B.
Both of these ISAs are valid and the overall subscription limit of £7,200 has not been exceeded. However, Mrs Gray subscribes a further £1,000 to the cash ISA with Manager A in October 2008 and a further £1,500 to the stocks and shares ISA with Manager B in March 2009. She has now subscribed £9,500 in total. However, neither Manager is aware that Mrs Gray has breached the overall subscription limit.
After the end of the year the managers make their returns and SSO identify that there has been an excess subscription. The subscriptions that breached the
overall limit were the £1,000 to the cash ISA in October 2008 and the £1,500 to the stocks and shares ISA in March 2009. The £1,500 subscribed to the stocks and shares ISA with Manager B in March 2009 must therefore be removed, together with £800 of the £1,000 subscribed to the cash ISA with Manager A in October 2008. Mrs Gray is therefore left with two ISAs, in which £7,200 is invested
• a cash ISA with manager A, which contains £2,200, and
• a stocks and shares ISA with manager B, which contains £5,000.