Closing a LISA opened by mistake, then opening another later within the same tax year

leavinghappy

This is asking on a relative's behalf, because they asked me for advice and I don't know.

They live overseas but are planning to move back to the UK in December. They are 39 now with birthday in February, so this is the last tax year in which they qualify to open a Lifetime ISA. The problem is, they already opened it last week despite not being UK resident yet. It's a cash account, I think with only £1 in it.

If they close it, can they still open another one before February? If not, are they likely to get in trouble by leaving it open? Afaik they pay taxes in the other country, not sure if they have given HMRC their foreign address.

eskbanker

Is there a cooling-off period for the product in question, which would effectively allow it to be voided as if it had never happened?

Alexland

First thing to check is if they will even qualify as a UK resident for tax purposes during the current tax year to enable them to make any ISA contribution?

https://www.gov.uk/tax-foreign-income/residence

https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt