Worrying question for all ISA-holders

ferox666

I recently had two small fraudulent transactions on my current account - luckily I noticed the next day and was able to immediately inform the bank and cancel my debit card/get a new one and the bank has given me the money back immediately (while they investigate).

The whole thing has given me a worry though - what if fraud was committed on your ISA account? For example, say someone had your full details (name, address, account number, sort code etc of the ISA) that they had got somehow (for example someone in post office intercepting your annual statement or a fraudster in the bank's staff). What if they transferred money out of your ISA and your annual ISA allowance had been used up? Would the bank be able to just pay it back in and even if they did would HMRC/Inland Revenue still consider this to be legal/tax free or would it have been invalidated by the removal and you could only add the money back in £3k a year amounts?

Some people have £20,000+ in their ISA, what if someone fraudulenty transferred/removed all of this - could/would the bank just return it the full £20k and would it still have tax free status?

Even if the bank does return it, what if you just happened to be the subject of an HMRC/Revenue tax enquiry and they notice that this had happened a few years earlier and decide the removal had invalidated the money's tax free status so present you with a tax bill on the interest?

As time goes on and people's ISA balances get higher this becomes more and more worrying. I just wondered if there is a previous decision/ruling on what would happen in this case and a guarentee that your money would indeed remain tax free.

Mikeyorks

The second is where the manager removes cash from the investor’s PEP or ISA
without his (her) knowledge or authority and the investor is unaware that
anything untoward has occurred. For example, John Smith instructs the manager
to remove £3,000 from his ISA and the manager instead removes £3,000 from
James Smith’s ISA and pays it to John Smith

Extract from para 10.31b of HMRC guidance to ISA managers. The preface which, I haven't copied, is to the effect this is a case within the jurisdiction of the ISA manager to rectify - and which they do not have to refer to HMRC (but they need to retain documentary evidence) . It's broadly how they would handle your query - ie the money would be replaced without adverse effect to the investor.

FelOn_2

Mikeyorks wrote: »

Extract from para 10.31b of HMRC guidance to ISA managers. The preface which, I haven't copied, is to the effect this is a case within the jurisdiction of the ISA manager to rectify - and which they do not have to refer to HMRC (but they need to retain documentary evidence) . It's broadly how they would handle your query - ie the money would be replaced without adverse effect to the investor.

Good research, ferox666 can get a good nights sleep now, without worrying about his/her ISA :T