ISA Bulletin 44 (PDF 93K) - HM Revenue & Customs

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5. In regulation 31 (returns of information by account manager)— (a) in paragraph (3)(c)(ii), after “paragraph (3A)” insert “and (3AB)”; and (b) after paragraph (3A) insert— “(3AB) Where a defaulted cash account subscription in accordance with regulation 5D (subscriptions disregarded for the purposes of the subscription limits in regulations 4ZA and 4ZB) is made to an account in the year or part of the year for which a return required by this regulation is made, the amount of subscriptions reported to an account manager in accordance with regulation 5DF(1)(a)(ii) (current year’s subscriptions made to the defaulted cash account) must be included as part of the total amount of cash subscribed to the account required by paragraph (3)(c)(ii).”. Name Name Date Two of the Lords Commissioners of Her Majesty’s Treasury
EXPLANATORY NOTE (This note is not part of the Order) These Regulations, which come into force on *** 2012, amend the Individual Savings Account Regulations 1998 (S.I. 1998/1870) (“the ISA Regulations”) to allow certain subscriptions to accounts to be disregarded for the purposes of the subscription limits, in cases where there has been a default by the cash account manager or where a compensation payment has been made to the investor in relation to the failure of a stocks and shares account. Regulation 1 and 2 provide for the citation and commencement of these Regulations and generally for the amendment of the ISA Regulations. Regulation 3 amends the definition in regulation 2A(4) of the ISA Regulations, clarifying the term “account investor” for the purposes of new regulations 5D to 5DD and 5DF in relation to junior ISAs. Regulation 4 inserts the new regulations 5D to 5DM into the ISA Regulations. Regulation 5D provides for the general rule that defaulted cash account subscriptions, defaulted investment subscriptions and subscriptions permitted by regulation 5DE are to be disregarded for the purposes of the ISA subscription limits, so long as the information specified in inserted regulation 5DF is provided to the account manager. The new regulations 5D to 5DM provide as follows. Regulation 5DA provides that a defaulted cash account subscription is one made (to a cash or stocks and shares account) within 180 days of a default event, not exceeding the amount invested in the defaulted account immediately before the default event occurred. Regulation 5DB provides that a defaulted investment subscription is one made to a stocks and shares account within 180 days of a defaulted investment payment being made to an account investor, not exceeding the amount of the defaulted investment payment. Where a subscription is made to a cash junior ISA account, but would have been a defaulted investment subscription if made to a stocks and shares account, it is permitted by regulation 5DE. Regulations 5DC and 5DD describe what is meant by a default event and defaulted investment payment. A default event occurs when the cash account manager is determined to be in default in accordance with rules contained in the Financial Services Handbook (made by the Financial Services Authority under the powers in the Financial Services and Markets Act 2000 (c. XX)). A defaulted investment payment is made where the account investor receives compensation for poor performance, loss or depreciation of an investment in a stocks and shares account. Regulation 5DF describes the information which must be provided to the account manager when a subscription under regulation 5D is made. Regulation 5DG provides for the general rule that only one subscription under regulation 5D or 5DE may be made notwithstanding that the amount subscribed is less than the maximum that could have been subscribed under that regulation. Where an event occurs after 6th April 2011 and before *** 2012 that would have been a default event for a cash account or a defaulted investment payment within regulations 5DC and 5DD if it had occurred after *** 2012, regulation 5DH provides that it shall be treated as occurring on *** 2012 for the purposes of regulations 5D to 5DG. Regulation 5DI defines Lehman Brothers investment and Keydata investment, for the purposes of the special application to those investments of the general rules in regulations 5DB, 5DD, 5DF and 5DH. In relation to a Lehman Brothers investment, regulation 5DJ applies regulation 5DB subject to the maximum amount of the single defaulted investment payment provided under regulation 5DL(2). Broadly, in respect of defaulted investment payments made or treated (under regulation 5DH) as made on *** 2012, the maximum amount is the greater of the value of the investment on 15th September 2008 and the total payments made (or treated as made under regulation 5DH). In respect of subsequent subscriptions, regulation 5DL(3) provides the maximum amount is the greater of ……..
Page 1 and 2: Savings Schemes Office ISA Bulletin
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ISA Bulletin 44 (PDF 93K) - HM Revenue & Customs

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