ISA deposits went into a closed ISA account, APS doesn't apply...

pea60s52w

Hi!

Months ago, as executor, I secured Grant of Probate and the investments in my mother's estate were closed/liquidated before distribution to the beneficiaries. This is because financial regulations apply to some of the beneficiaries who work in the regulated sector (can't continue to invest in a firm you do the books for, etc.)

Several months after the whole thing was done and dusted I've received a letter from the deceased's primary bank saying that they incorrectly accepted some ISA deposits in FY20/21 - some time after being notified of Mum's death and freezing all her accounts - by mistake.

I don't know when the payment was made, or how much was paid, I only know the closing balance of the ISA.

Their letter says I don't need to do anything but then it waffles on about applying for an Additional Permitted Subscription and talking to HMRC. As far as I can see this only applies to surviving spouses or civil partners who want to keep the ISA, so I don't see the relevance of it if the ISA was closed at the same time as the current account and savings account with the same bank, and that bank simply put the combined amount into the Probate account for the executor to distribute.

So as the executor, do I need to do anything or not? Do the beneficiaries need to do anything or not? Does someone need to pay tax on the unquantified amount paid in, if so who needs to pay it an how would anybody know how much tax is due if the only thing I have is the closing balance?

I rang the bank up and their own folks seem completely baffled, I've asked one accountant who seemed equally baffled, HMRC is closed for the weekend so I can't ask them. Surely if some bean counter has identified this as a potential problem, someone somewhere in the industry must have an idea of what happens next...

Marcon

pea60s52w said:

Hi!

Months ago, as executor, I secured Grant of Probate and the investments in my mother's estate were closed/liquidated before distribution to the beneficiaries. This is because financial regulations apply to some of the beneficiaries who work in the regulated sector (can't continue to invest in a firm you do the books for, etc.)

Several months after the whole thing was done and dusted I've received a letter from the deceased's primary bank saying that they incorrectly accepted some ISA deposits in FY20/21 - some time after being notified of Mum's death and freezing all her accounts - by mistake.

I don't know when the payment was made, or how much was paid, I only know the closing balance of the ISA.

Their letter says I don't need to do anything but then it waffles on about applying for an Additional Permitted Subscription and talking to HMRC. As far as I can see this only applies to surviving spouses or civil partners who want to keep the ISA, so I don't see the relevance of it if the ISA was closed at the same time as the current account and savings account with the same bank, and that bank simply put the combined amount into the Probate account for the executor to distribute.

So as the executor, do I need to do anything or not? Do the beneficiaries need to do anything or not? Does someone need to pay tax on the unquantified amount paid in, if so who needs to pay it an how would anybody know how much tax is due if the only thing I have is the closing balance?

I rang the bank up and their own folks seem completely baffled, I've asked one accountant who seemed equally baffled, HMRC is closed for the weekend so I can't ask them. Surely if some bean counter has identified this as a potential problem, someone somewhere in the industry must have an idea of what happens next...

Wait until Monday and you can contact HMRC - and probably have a very long wait before you get through (if at all), and then a frustrating conversation!

The bank made the mistake, so they should sort it out. I'd go back to them (write or e-mail - no point ringing, as you've already tried that), point out the APS doesn't apply here, and refer them to a link they may find helpful: https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager

Ask them to confirm, in writing, exactly what actions you need to take as an executor; and ask them to confirm they will cover any costs involved, given it was their mistake.

Keep_pedalling

As there is no spouse to take up the APS, I don’t think the mistake will have much of an impact on the amount the beneficiaries receive and I can’t see that HMRC are going off of much help here.

if the mistake has had a negative effect on the amount beneficiaries receive then the back should pay compensation.