INDIVIDUAL SAVINGS ACCOUNT
Synopsis: It would appear that HMRC will normally not allow inherited ISAs to be arranged with new account managers.
Our earlier Bulletin noted that the mechanism for inheriting ISAs was not going to be as straightforward as might have been expected.
Further to that bulletin the regulations say the survivor’s ISA subscription must be with the plan manager of the deceased’s ISA. We did not cover this earlier because:
• The draft regulations (5DDA (7)) gave HMRC the power to authorise another manager as the recipient: and
• The HMRC TIIN seemed to suggest such authorisation was virtually automatic: ‘In most cases, it is anticipated that the additional allowance should be used to subscribe to an ISA offered by the same financial institution that provided the deceased saver’s ISA. An eligible individual may use this additional allowance by subscribing to an ISA they already hold, or by opening a new ISA.
We have since been in correspondence with HMRC and they have said that 5DDA(7) ‘…provides for cases where a provider is unable to accept an additional permitted subscription, for instance because their book of business is closed. Where the manager is unable to accept a subscription they would need to refer to HMRC.’ The TIIN, to which we referred in our correspondence to HMRC, is thus not telling the whole story.
COMMENT
These regulations are in draft and it is to be hoped that the final version incorporates a little more flexibility.
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