Exceeded ISA Limit by £1?

dunstonh

MoneySaverLog wrote: »

Not that I would, but if you did it a second time what would the response be from HMRC ?

Never experienced it but you are effectively committing tax fraud. So, I guess that allows them a lot of scope on now they deal with it.

lisyloo

what would the response be from HMRC ?

Depends on whether they think it's a mistake or whether they suspect you more seriously.
I believe they have the power to turn your house/office upside down looking for paperwork if they have sufficient grounds.
If serious enough you could be fined/ go to prison or both.

A conviction could make it hard for you to get insurance or a job in future as it's may well be something you have to declare.

So potentially the consequences are very serious and tax evasion is a serious crime.

So someone making mistakes on their ISA could certainly find themselves the subject of a lengthy, expensive and intrusive investigation.
You may find you have to pay for an accountant or legal defence.

Februarycat

I just got a letter in February this year from HMRC telling me I had gone over my limit and just telling me the rules and what the limits, and to read it and make sure I understand it and that was it, but obviously if you kept going over you would have to pay tax on it.

AirlieBird

There is some wildly inaccurate, over the top and unneccessary comments in this thread. Any deposits that go in to an ISA that are in breach of ISA regulations and cannot be 'repaired' are null and void and will be returned to you. This should happen immediately, but if not will happen about 9-12 months after the end of the ISA year when HMRC do their annual ISA compliance run. Any interest or gains earned on void deposits will also be returned and taxed in the normal way.

HMRC recognised there were many innocent mistakes being made during the first few years and decided to waive the first mistake you made if in their judgement is was innocent. Otherwise the normal void rules come into play.

HMRC will only take more heavy action against those that are deliberately and persistently in breach of ISA rules and even then it's more likely that your profile will be marked as a risk and you be subjected to a full tax investigation rather than any penalties from the ISA compliance checks.

lisyloo

I just got a letter in February this year from HMRC telling me I had gone over my limit

You get one "slap on the wrist" or "get out of jail free card".
You will get treated more seriously for repeated offences.
So please don't take it lightly just because you got off apparently "scott free" the first time. It is still on your records and would count against you if you made any mistakes in future.
The more mistakes you get the less credible it becomes that they are innocent especially as it's not that hard to add up a total.
Youa re expected to be able to add up to £5340.

dunstonh

Februarycat wrote: »

I just got a letter in February this year from HMRC telling me I had gone over my limit and just telling me the rules and what the limits, and to read it and make sure I understand it and that was it, but obviously if you kept going over you would have to pay tax on it.

That is the get out of jail free card I was referring to. It sounds like the ones I have seen before. Nice to know they were still issuing them as little as a month ago.

MoneySaverLog

Not had a "Get out of Jail free card" and don't intend getting one either. The ISA rules are not that difficult to understand once you get your head around them.

joe2cool

Hi I noticed a few days later 'Northern Rock' just took out the £1, (Transaction Details) 'debit (no penalty)' Can't see it back into my account as yet?
Thx guys for all your information/help, guess I've escaped jail

joe2cool

Actually received a cheque for £1 yesterday