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Invested with 2 Stocks and Shares ISA providers in the same year by mistake

Hi Guys,
   Looking for some advice here. 
   Both myself and my wife invested in ISA for the first time this year. We invested in Stocks and Shares ISA, but didn't see the rule about investing only with 1 provider in  a financial year, so we both have £10K with 2 providers.
   I called HMRC, and they couldn't help me much, except saying to wait for them to respond.
 
   I called one of the providers, and one of them said I was within the 30 day cooling off period, which means I can reverse the investment, but didn't know if I can then go and transfer the funds to the other provider (for the previous tax year).

  Anyone has any thoughts on how I should deal with it. Can't be only me making this mistake (maybe I am!!) ?

  Thanks

Replies

  • eskbankereskbanker Forumite
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    bbanduser said:
    I called one of the providers, and one of them said I was within the 30 day cooling off period, which means I can reverse the investment, but didn't know if I can then go and transfer the funds to the other provider (for the previous tax year).
    If you've paid into two S&S ISAs in the same tax year but one is still within its cooling off period, then, yes, cancelling it will effectively void it as if nothing had happened, putting you back into compliance.

    However, if you cancel the invalid ISA and end up with your £10K in cash back in your bank, you can pay it into any valid ISA but only as a current tax year contribution....
  • dunstonhdunstonh Forumite
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     I called HMRC, and they couldn't help me much, except saying to wait for them to respond.

    And that is what you should do in most cases.....


       I called one of the providers, and one of them said I was within the 30 day cooling off period, which means I can reverse the investment, but didn't know if I can then go and transfer the funds to the other provider (for the previous tax year).

    ...however, the cancellation rights period is still possible and that voids the ISA completely as if it never existed.  So, that may be the simpler option.


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • bbanduserbbanduser Forumite
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    Thanks for your thoughts.
    If I leverage the cooling off period, it effectively voids the ISA, which means I lose the amount I invested in the ISA bucket for the previous tax year.
    I was thinking if I transfer the investment to the other company, then I do not lose the investment in last years bucket and now I have £20K in one ISA (ok temporarily I had it in 2 for a few days).

    This sounds better - anything I am missing?
  • eskbankereskbanker Forumite
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    bbanduser said:
    If I leverage the cooling off period, it effectively voids the ISA, which means I lose the amount I invested in the ISA bucket for the previous tax year.
    You won't lose the amount itself (£10K), you'd get that back!  You'd have wasted £10K of your annual ISA allowance if that's what you mean, but will you be needing your full 2021/22 allowance?

    bbanduser said:
    I was thinking if I transfer the investment to the other company, then I do not lose the investment in last years bucket and now I have £20K in one ISA (ok temporarily I had it in 2 for a few days).

    This sounds better - anything I am missing?
    Yes, you're seemingly missing the fact that as at the end of the 2020/21 tax year, you had current year contributions to an invalid combination of ISAs, a fact which will be reported by the providers to HMRC if you don't void the later one.  HMRC might choose to overlook a first offence, but are under no obligation to.
  • dunstonhdunstonh Forumite
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    Does it matter if its in the ISA or not?  After all, unless you are  company director, you are unlikely to be using your dividend allowance and capital gains tax allowance.  So, hold it in a GIA and bed & ISA it in future years.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • edited 22 April 2021 at 6:06PM
    bbanduserbbanduser Forumite
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    edited 22 April 2021 at 6:06PM
    Yes, I want to use the full allowance every year moving forward.

    If I don't have any money in the second account (all in 1 isa) in the next few days and tell HMRC it was a mistake and I fixed it as soon as I learnt, surely it is a better story than leaving it as it is. I'm not pretending I didn't make a mistake. 
     I have hardly earnt £200 in the last few days from the investment anyway. 
  • eskbankereskbanker Forumite
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    bbanduser said:
    If I don't have any money in the second account (all in 1 isa) in the next few days and tell HMRC it was a mistake and I fixed it as soon as I learnt, surely it is a better story than leaving it as it is. I'm not pretending I didn't make a mistake.
    Transferring the money in the next tax year doesn't actually fix it as such so isn't any better than not doing anything - once the tax year ended you lost the opportunity to fix it, other than by voiding the invalid ISA during the cooling off period, which remains the appropriate course of action.... 
  • edited 22 April 2021 at 6:23PM
    bbanduserbbanduser Forumite
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    edited 22 April 2021 at 6:23PM
    eskbanker said:
    bbanduser said:
    If I don't have any money in the second account (all in 1 isa) in the next few days and tell HMRC it was a mistake and I fixed it as soon as I learnt, surely it is a better story than leaving it as it is. I'm not pretending I didn't make a mistake.
    Transferring the money in the next tax year doesn't actually fix it as such so isn't any better than not doing anything - once the tax year ended you lost the opportunity to fix it, other than by voiding the invalid ISA during the cooling off period, which remains the appropriate course of action.... 
    I get what you are saying, but I lose.£10k allowance. It would have been "live" for 3 weeks only, and earnt nothing, so I feel its worth a try. It should be blatantly obvious it was a simple mistake and I didn't gain anything from it. Its obviously not perfect, but the mistake is made and I can't go back in time to fix it. 
  • eskbankereskbanker Forumite
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    bbanduser said:
    eskbanker said:
    bbanduser said:
    If I don't have any money in the second account (all in 1 isa) in the next few days and tell HMRC it was a mistake and I fixed it as soon as I learnt, surely it is a better story than leaving it as it is. I'm not pretending I didn't make a mistake.
    Transferring the money in the next tax year doesn't actually fix it as such so isn't any better than not doing anything - once the tax year ended you lost the opportunity to fix it, other than by voiding the invalid ISA during the cooling off period, which remains the appropriate course of action.... 
    I get what you are saying, but I lose.£10k allowance. It would have been "live" for 3 weeks only, and earnt nothing, so I feel its worth a try. It should be blatantly obvious it was a simple mistake and I didn't gain anything from it. Its obviously not perfect, but the mistake is made and I can't go back in time to fix it
    You can fix it but not in the way you'd prefer!  Having said that, there isn't a huge downside in choosing not to void it, in that if HMRC pick you up on the mistake, there isn't any likely sanction as such, other than potentially removing the ISA status of that second £10K, so taking that step pre-emptively is largely unnecessary....
  • edited 23 April 2021 at 4:47PM
    masonicmasonic Forumite
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    edited 23 April 2021 at 4:47PM
    bbanduser said:
    eskbanker said:
    bbanduser said:
    If I don't have any money in the second account (all in 1 isa) in the next few days and tell HMRC it was a mistake and I fixed it as soon as I learnt, surely it is a better story than leaving it as it is. I'm not pretending I didn't make a mistake.
    Transferring the money in the next tax year doesn't actually fix it as such so isn't any better than not doing anything - once the tax year ended you lost the opportunity to fix it, other than by voiding the invalid ISA during the cooling off period, which remains the appropriate course of action.... 
    I get what you are saying, but I lose.£10k allowance. It would have been "live" for 3 weeks only, and earnt nothing, so I feel its worth a try. It should be blatantly obvious it was a simple mistake and I didn't gain anything from it. Its obviously not perfect, but the mistake is made and I can't go back in time to fix it. 
    Transferring the ISA will not make any difference to your situation. You can do it, but it won't change anything. It would be best to do nothing and wait for HMRC to contact you, as you have been advised by them. Cancelling the ISA would pre-suppose that HMRC is going to void it, which may not be the case.
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