Closing ISA within 14 days - can I open another?

caveman38

Although she had internet banking set up with Santander. Her recent application for an ISA has caused a problem with profiles not matching. After spending 2 hours on the phone in the last couple of days she was finally told to visit a branch. Today she was told by the branch that the merging of profiles will take 2 weeks and I'm not sure that her ISA will be visible even then.
Therefor as she is cheesed off with the whole process, she has closed it and her feeder amount of £5 will be returned. However she has been told that she will not be able to open another ISA in this tax year as a result.
I was of the opinion that because she is within 14 days of opening it a cooling off period will allow her to open another ISA with another provider. Am I right or could Santanders own T&C's restrict her? 

eskbanker

If the ISA had a 14 day cooling off period then yes, cancelling (rather than simply closing) it during that time would effectively allow use of this year's allowance elsewhere.

caveman38

It had £5 in and it was closed within 14 days. Does that make a difference?

eskbanker

caveman38 said:

It had £5 in and it was closed within 14 days. Does that make a difference?

My understanding remains that she'd specifically need to cancel the account in order to reverse the process as if it had never happened, allowing funding of another cash ISA in the same tax year.  Simply closing it, even within the 14 days, won't achieve that, in that Santander will still (accurately) report to HMRC that she paid £5 into a cash ISA during 2022/23, regardless of the fact that the account was subsequently closed.

masonic

Even if there wasn't a cooling off period, it would be treated as a self-transfer and exempted from action by HMRC if she has not done the same thing with another ISA already during this tax year.

https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager

caveman38

masonic said:

Even if there wasn't a cooling off period, it would be treated as a self-transfer and exempted from action by HMRC if she has not done the same thing with another ISA already during this tax year.

https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager

Masonic, would you be so kind as to interpret that for me please. I don't really understand it or as to whether that allows my wife to open another ISA or not. Thanks in advance.

masonic

caveman38 said:

masonic said:

Even if there wasn't a cooling off period, it would be treated as a self-transfer and exempted from action by HMRC if she has not done the same thing with another ISA already during this tax year.

https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager

Masonic, would you be so kind as to interpret that for me please. I don't really understand it or as to whether that allows my wife to open another ISA or not. Thanks in advance.

If all she has done this tax year is open the Santander ISA, paid some money in, then close it, then yes she can open another cash ISA and fund it.

caveman38

Seeing as I was finding this information for my wife, I felt that I needed to be !00% sure. Sorry Masonic I am not ignoring your info / advice, but.
I have phoned a number of Banks & BS's and all seem to think that she cannot open another this year and cooling off period does not apply to ISA's. Yesterday I used the HMRC general enquiries, where you do not furnish any personal details but ask questions. Assuming these people are HMRC qualified staff and not helpful members of the public. I got two answers where one man said she cannot and a lady said she could open another ISA using the 14 day cooling off facility on her first one. 
It is a hard decision and not wanting to fall foul of HMRC rules, she will refrain from opening one in 22/23, a shame.

masonic

caveman38 said:

Seeing as I was finding this information for my wife, I felt that I needed to be !00% sure. Sorry Masonic I am not ignoring your info / advice, but.
I have phoned a number of Banks & BS's and all seem to think that she cannot open another this year and cooling off period does not apply to ISA's. Yesterday I used the HMRC general enquiries, where you do not furnish any personal details but ask questions. Assuming these people are HMRC qualified staff and not helpful members of the public. I got two answers where one man said she cannot and a lady said she could open another ISA using the 14 day cooling off facility on her first one. 
It is a hard decision and not wanting to fall foul of HMRC rules, she will refrain from opening one in 22/23, a shame.

I don't know why anyone would be swayed by the non-binding opinions of poorly trained customer service advisers (who couldn't even agree with each other) that is contradicted by official documentation, but your choice...

If you are going to go down this path, why not get Santander to reinstate the ISA so that she can transfer it and use it elsewhere?

caveman38

masonic said:

caveman38 said:

Seeing as I was finding this information for my wife, I felt that I needed to be !00% sure. Sorry Masonic I am not ignoring your info / advice, but.
I have phoned a number of Banks & BS's and all seem to think that she cannot open another this year and cooling off period does not apply to ISA's. Yesterday I used the HMRC general enquiries, where you do not furnish any personal details but ask questions. Assuming these people are HMRC qualified staff and not helpful members of the public. I got two answers where one man said she cannot and a lady said she could open another ISA using the 14 day cooling off facility on her first one. 
It is a hard decision and not wanting to fall foul of HMRC rules, she will refrain from opening one in 22/23, a shame.

I don't know why anyone would be swayed by the non-binding opinions of poorly trained customer service advisers (who couldn't even agree with each other) that is contradicted by official documentation, but your choice...

If you are going to go down this path, why not get Santander to reinstate the ISA so that she can transfer it and use it elsewhere?

Assuming they would allow that. Could it be deposited with a nominal amount and transferred after a short period and added to at the new providers - to save on penalties.

masonic

caveman38 said:

masonic said:

caveman38 said:

Seeing as I was finding this information for my wife, I felt that I needed to be !00% sure. Sorry Masonic I am not ignoring your info / advice, but.
I have phoned a number of Banks & BS's and all seem to think that she cannot open another this year and cooling off period does not apply to ISA's. Yesterday I used the HMRC general enquiries, where you do not furnish any personal details but ask questions. Assuming these people are HMRC qualified staff and not helpful members of the public. I got two answers where one man said she cannot and a lady said she could open another ISA using the 14 day cooling off facility on her first one. 
It is a hard decision and not wanting to fall foul of HMRC rules, she will refrain from opening one in 22/23, a shame.

I don't know why anyone would be swayed by the non-binding opinions of poorly trained customer service advisers (who couldn't even agree with each other) that is contradicted by official documentation, but your choice...

If you are going to go down this path, why not get Santander to reinstate the ISA so that she can transfer it and use it elsewhere?

Assuming they would allow that. Could it be deposited with a nominal amount and transferred after a short period and added to at the new providers - to save on penalties.

In theory, it could be reinstated and left empty, or reinstated as easy access. If I were you, I'd be pushing on them quite hard to to come up with solutions that do not leave her out of pocket, such as compensation to cover any transfer out penalty. They've given her factually incorrect information that has left her in the position where she might otherwise lose her allowance. If a complaint were pursued, I have not doubt it would be upheld either by someone a bit more switched on at Santander, or the Financial Ombudsman Service.

It is quite clear that a cancellation period does apply to all Santander's fixed ISAs.

https://www.santander.co.uk/assets/s3fs-public/AD_documents/h250078_p542027_save0610nov22h3_lr.pdf

Where cancellation is invoked, the ISA should be not reported to HMRC, so the customer is free to use their allowance elsewhere.

What you've been told is, despite cancelling, Santander intends to report to HMRC that your wife has subscribed (presumably £5) to a cash ISA with them this year.

This is HMRC's position on the issue: https://www.gov.uk/guidance/how-to-open-an-isa-as-an-isa-manager#cancellation