ISA Bulletin 45 (PDF 44K) - HM Revenue & Customs

Savings Schemes Office
ISA Bulletin
Number 45 5 September 2012
The ISA Bulletin keeps ISA managers informed of any new
developments relating to the ISA scheme. Please ensure the
appropriate people in your organisation read it.
We suggest that you keep Bulletins at the front of your copy of the
Guidance Notes for ISA Managers.
This Bulletin contains an article on
� Guidance Notes for ISA Managers
Enquiries on this bulletin should be addressed to
David Taylor
HM Revenue & Customs (SSO Liverpool)
Room 330
St John’s House
Merton Road
Liverpool L75 1BB
Telephone 0151 472 6269
e-mail: savings.audit@hmrc.gsi.gov.uk

Guidance Notes for ISA Managers
The latest (2012_09) version of the Guidance Notes will be placed on the website at
http://www.hmrc.gov.uk/isa/isa-guidance-notes-2008.pdf in the next few days. The
main changes are as follows.
PARAGRAPHS 5.24 – 5.26
Managers may accept applications signed under a Power of Attorney where the
investor is unable to sign the application because he or she is a member of the
armed forces on active service in a war zone (for example, Afghanistan).
PARAGRAPHS 6.51 – 6.76
Guidance on the circumstances in which an investor may pay money into an ISA
without that payment counting towards the annual ISA subscription limits.
6.51 – 6.56
Cash ISA managers declared in default by either the FSA or the Financial Services
Compensation Scheme (FSCS) – a single subscription of up to the balance held in
the failed ISA at the time of default will be allowed into either a cash ISA or a stocks
and shares ISA.
6.57 – 6.62
Compensation received in respect of the poor performance, loss, depreciation (or risk
of depreciation) of a stocks and shares qualifying investment – a single subscription
of up to the amount of compensation received can be made to a stocks and
shares ISA.
6.63 – 6.69
Failures linked to the collapse of Lehman Brothers – a single subscription of up to
the value of the failed investment at the time of the Lehmans collapse can be
made to a stocks and shares ISA.
6.70 – 6.76
Failures linked to the collapse of Keydata Investment Services – a single subscription
can be made into a stocks and shares ISA of up to the amount originally
subscribed for the failed Keydata investment.
PARAGRAPH 7.43
Guidance on the circumstances in which managers may regard the holder of a
Depositary Interest (DI) as the beneficial owner of the underlying investments – and
therefore whether the DI can be a qualifying investment that can be held in a stocks
and shares ISA.
PARAGRAPH 7.49
Confirmation that this paragraph does not apply to uninvested cash in a stocks and
shares Junior ISA.
PARAGRAPH 8.6
Clarification that a connected account is a savings account that is not an ISA, a
Junior ISA or a Child Trust Fund.

PARAGRAPH 10.3
Where instructions are given at the same time to match a purchase with a sale, any
short period in which the account goes into deficit on the ISA manager’s systems will
not be regarded as a breach the ISA rules.
PARAGRAPH 11.15A
A Transfer Application is not required where the ISA is being transferred into an
existing ISA with the new ISA manager: instead, the investor should be asked to
complete a Transfer Authority Form. However, the new manager must obtain an ISA
application form where
� the investor intends, and is eligible, to subscribe to the ISA after the transfer, and
� the existing application form is no longer valid
PARAGRAPH 11.15B (INTERNAL TRANSFERS)
A Transfer Application is not required where an existing ISA investment is switched
from one product to another, but the existing ISA continues (with either the same or a
new account number). However, an ISA application form must be obtained where
� the investor intends, and is eligible, to subscribe to the ISA after the transfer, and
� the existing application form is no longer valid
However, a Transfer Application is required where a cash ISA is transferred to a
stocks and shares ISA and the investor intends to subscribe following the transfer.
PARAGRAPH 11.16
Where the transfer is a bulk transfer (see Guidance 11.19a) information about the
ISA(s) being transferred must be provided at the time of the transfer. Where the
investor initiates the transfer the information must be provided within 30 days after
the transfer.
PARAGRAPHS 11.18A – 11.18C (DATE OF TRANSFER)
11.18a
When an ISA is transferred, the two ISA managers must agree a common transfer
date.
11.18b
The new ISA manager may accept subscriptions from the date of transfer (provided
he holds a valid ISA application form).
11.18c
Where an ISA transfer straddles the end of a tax year:
� the ISA is included in the new manager’s Annual Returns if the transfer date is 5
April (or earlier)
� the ISA is included in the old manager’s Annual Returns if the transfer date is 6
April (or later)
PARAGRAPHS 11.19A – 11.19C (BULK TRANSFERS)
11.19a
Defines bulk transfers.

11.19b
Requires the manager to notify HMRC and the investors whose accounts are being
transferred before the transfer is made; and specifies the information to be contained
in the notice.
11.19c
Sets out the circumstances in which an investor may subscribe after the transfer
without having to complete a transfer application or a fresh application form.
PARAGRAPHS 11.19D (GROUP TRANSFERS)
This paragraph defines a group transfer and specifies the circumstances in which an
investor may subscribe after the transfer without having to complete a fresh
application form.
PARAGRAPH 12.15
The wording of the first bullet point has been brought into line with the wording at
paragraph 26.3.8.
PARAGRAPHS 12.32 – 12.33 (SELF TRANSFERS)
The first cash ISA is regarded as closed where all of the current year subscriptions
are withdrawn.
PARAGRAPH 20.3.1
The wording of the first and third bullet points has been brought into line with the
wording at paragraph 5.10.
PARAGRAPH 20.9.2
The wording of the fifth and sixth bullet points has been changed to make it clear that
they apply to stocks and shares Junior ISAs only.
PARAGRAPH 21.3.1
The wording of the first and third bullet points have been brought into line with the
wording at paragraph 5.10.
PARAGRAPH 24.4.1 (incomplete or incorrect application forms)
Additional guidance covering the following situations:
� a JISA is opened by a parent who later informs the manager that the child is
eligible for a CTF
� a JISA is opened by a parent who later informs the manager that they or the other
parent have opened a JISA elsewhere
� a JISA is opened and the manager is later informed that the registered contact
does not have parental responsibility for the child
PARAGRAPH 25.4.2
The wording of has brought into line with the wording at paragraph 5.10.
PARAGRAPH 25.4.7
The wording of has brought into line with the wording at paragraph 18.18.

PARAGRAPH 25.4.8
This box must only be completed if the Junior ISA was opened in the tax year in
which the transfer takes place. If this is the case, it should be completed with the
total subscriptions made to the Junior ISA from the date of opening of the account to
the date of transfer. Otherwise, the box must be left blank.
PARAGRAPH 25.4.9
This box must only be completed if the Junior ISA was opened in the tax year in
which the transfer takes place. If this is the case, it should be completed using the
format DDMMCCYY to show the date the first subscription was received. Otherwise,
the box must be left blank.
PARAGRAPH 26.3.8
The wording has been changed to, “the market value (paragraphs 10.20 – 10.22) of
the investments, other than insurance policies (see paragraph 12.16) …“