Taxman ignores multiple ISA loophole!

Baldur

withnell wrote: »

Surely from what the article says its only for this tax year - and will allow over 50's to up their ISAs for the year even if they have a fixed rate that won't allow additions

Reading Section 12 of the HMRC Guidance Notes for ISA Managers is probably more beneficial than reading the Daily Mail's dramatised version of it.

rb10

Reading from the guidance notes, which I'd take to be a more accurate source than the Daily Mail, they say

12.23 An ISA may be found to be invalid. [...] Invalid accounts
can, in certain circumstances, continue as ISAs after corrective action, or ‘repair’. [...]

12.30 ISA investors must transfer their ISAs through the ISA manager. Investors cannot transfer an ISA by closing it and opening a new ISA with the new ISA manager (commonly known as ‘self transfer’).

12.32 However, where
• the investor subscribes to two cash ISAs, in the same tax year, and
• subscriptions to the first ISA subscribed to were valid, and
• the first ISA subscribed to was closed (see paragraph 12.33) before
subscriptions to the second ISA were made the subscriptions to the second ISA may be valid (see paragraph 12.32a).
12.32a The first cash ISA to be self-transferred in tax year is valid, and need not be repaired.
The second (and any subsequent) self-transferred cash ISA is not valid and is not eligible for repair.

All of which indicates that it would be permitted, ONCE in any tax year.

However, if you are transferring more than the annual limit, then the bank are unlikely to accept this into an ISA without multiple phone calls to head office, and I can imagine that the paperwork and attempts at persuading bank staff that it is allowed would mean only someone with a lot of time on their hands could do it.

It's surely much easier just to follow the standard path, and get the banks to transfer it. That way, you know that you'll be fine, and you won't end up with having to explain to your bank or HMRC at a later date.

Also, remember that although they are eligible for 'repair', it does say that you cannot 'self transfer', so you're putting yourself in a potentially sticky situation.

lemonjelly

BenL wrote: »

Has anyone been pulled up for more than 1 ISA in a tax year with different providers? They may have turned a blind eye for years.

Yes,

quite some time ago I had a letter from HMRC (or whatever incarnation they were at the time). They instructed me to go to the ISA provider & close the account. I was younger at the time & can't recall why it had happened, but for some reason I'd opened 2 ISA's in the 1 tax year.

antispam246

Is this article also saying we could be doing ISA transfers ourselves rather than relying on the banks to co-operate between one another?

MarkyMarkD

The article is saying that, but the article isn't necessarily right. It certainly isn't right in principle.

I don't understand for a moment why HMRC don't change the process to work as some consumers have suggested - provide an ISA maturity certificate along with a transfer cheque/BACS payment to the customer, and then allow reinvestment elsewhere on the strength of the maturity certificate.

Worked fine for the Icesave ISAs.