Help with ISA transfer and cancellation

Shoose

Hi

I had an easy ISA with the Abbey, which I had for a few years, and on 19th Apr this year I decided to transfer this into a Super ISA also with the Abbey. I had not paid any money into the easy ISA account this tax year. £1500 went into the Guaranteed Growth Plan, with £1517 into the Super ISA.
I then changed my mind, and decided to cancel the Super ISA.

I sent back the cancellation forms to the Abbey, which they have confirmed receipt of, within the fourteen day cooling off period. I asked that the funds be transfered back into the easy ISA, but instead I have been told that I am going to get two cheques back next week. No amount has been added for any interest earned since the new tax year started.

I thought that the whole process would be seamless, as they transfered my money in the branch from the easy ISA into the Super ISA without any problem, but now I have changed my mind I am losing interest on the account, and by the looks of things have to start another ISA, which surely can't be the case as I changed my mind within the cooling off period.

My questions are:

Can I just pay these cheques back into the Abbey to re open the easy ISA, so that in effect nothing has happened this tax year, and still be able to pay in £3600 this tax year?

Can I use these cheques to open an ISA with a different provider, and if so, will they accept them as a transfer in, and will I still be able to pay in £3600 this year?

UPDATE: JUST BEEN TO THE ABBEY,THEY PHONED THEIR HELPDESK, AND I'VE BEEN TOLD THIS WILL EFFECT MY ISA ALLOWANCE THIS YEAR. THE AMOUNT TRANSFERED FROM THE CASH ISA INTO THE SUPER ISA WILL NOT BE CLASSIFIED AS PRIOR YEAR

thanks for your help with this

Mikeyorks

Relatively complex ... so you need to ring the HMRC ISA Helpline for advice :

http://search3.openobjects.com/kbroker/hmrc/contactus/search.ladv?raction=view&fl0=__dsid%3A&sm=0&ha=34&as=1&sf=&sp_scope=hmrc&sc=hmrc&nh=10&sr=0&cs=ISO-8859-1&tx1=&tx0=366854

.... but I suspect you've completely lost the tax free benefit on the £1500 into the GEB. As you voluntarily agreed (I'm assuming it was there .. as it's not specific?) to have that taken out of the easy ISA and into the GEB. I'm also assuming their GEB is not ISA based? (Later ... it is and it isn't .... only their 6 year GEB can be opened as an ISA. But that makes it a Stock / Share ISA .... so you can't take the money backwards into a cash ISA)

You may get some joy on the £1517 which went into the Super ISA. But as you 'cancelled' it - that does look a bit ominous. However as you're essentially withdrawing the cash ... HMRC may allow you to re-deposit that in another cash ISA (as it's within the same tax year) under what is known as a 'self transfer'. If they agree to that .... then the (£1517) would not come out of your £3.6k allowance. But I suspect the other £1500 will.

However ..... you can but ring them. But if you get the cheques in the interim .... I would tend to just hold onto them until you've spoken to HMRC?

Shoose

Thanks for your help with this. I will call the help line and have a chat with them.

I did voluntarily have the cash transfered from the Easy ISA into the Gauranteed Growth Plan, which I was going to have for 6 years.

I was only told that I had 14 days to change my mind, which I presumed meant that everything would revert back to as it was before the transfer if I did so. Nothing was explained to me about not being able to transfer the funds back once in the GGP, or the implications of doing so. No one in the Abbey mentioned any or this when I first went into see them, or yesterday.

It seems mad having a 14 day cooling off period to allow you to change your mind, and when you do change your mind you are penalised for doing so.

What exactly does the 14 day cooling off period do?

I am just so glad that is wasn't a huge amount or money.

So if I understand correctly, the worse that could happen is that I have £3,017 that I can still pay into an ISA, but this will form part of my allowance this year, leaving me with £583 that I can still invest.

Also, I received one cheque back yesterday - which I cannot do anything with anyway, as they have made a spelling mistake in my surname!

Baldur

Shoose wrote: »

I did voluntarily have the cash transfered from the Easy ISA into the Gauranteed Growth Plan, which I was going to have for 6 years.

I was only told that I had 14 days to change my mind, which I presumed meant that everything would revert back to as it was before the transfer if I did so. Nothing was explained to me about not being able to transfer the funds back once in the GGP, or the implications of doing so. No one in the Abbey mentioned any or this when I first went into see them, or yesterday.

It seems mad having a 14 day cooling off period to allow you to change your mind, and when you do change your mind you are penalised for doing so.

What exactly does the 14 day cooling off period do?

The problem isn't so much the 14 day cooling off period (which basically, just guarantees the return of any money which you have deposited/invested), it's because previous year's Cash ISA funds are involved.

As Mikeyorks has said, you need to contact the HMRC's ISA helpline and explain the circumstances - Abbey have no powers to revert any of the funds to their previous tax free status.

Shoose

Thanks for your help.

I phoned the HMRC helpline today, and they told me they would have expected everything to go back to the way it was before the transfer and see no reason why it shouldn't, although they did say that each provider would have their own version of the requirements.

With regards to the cheques, HMRC said that I would have to talk to the Abbey or new provider to see if they would accept them as relating to last year. HMRC told me there were not any forms that they had, that had to be filled in.

I phoned the Abbey again today, and they told me that my old cash ISA is still open, so they should be able to transfer the funds back re the £1517, which should mean they go as prior year. They are sending me the forms to fill in.

Thanks again for your help with this - I've really learn't my lesson

Mikeyorks

That's good news. I did expect HMRC to agree you could put the £1517 into a new ISA without reducing this year's allowance. So 'transferring' it back really isn't much difference.