CII FA5 Chapter 7 Flashcards
What is included in the annual return of statistical information for ISAs?
The annual return must include details on the number of ISAs opened and closed, the total amount subscribed, the number of investors, and other relevant statistical data required by HMRC.
How should depositary interests held on behalf of clients be reported in the annual return?
Depositary interests should be reported in the same way as the underlying investments they represent, ensuring accurate reporting of holdings.
How long should a continuous application form for an ISA be retained?
A continuous application form should be retained for as long as the ISA remains open and for at least three years after closure.
List five checks an HMRC audit team would make on ISA applications.
- Verification of investor eligibility
- Compliance with subscription limits
- Accuracy of personal information
- Validity of application dates
- Correct reporting of investments
What checks would an HMRC audit team make on the accounts of deceased investors?
They would ensure proper account closure, correct tax treatment, adherence to time limits, and compliance with rules regarding transfers to surviving spouses.
If missing personal information is identified during an HMRC audit, how long does the ISA manager have to obtain it?
The ISA manager must obtain the missing information within 30 days of identification.
Can incorrect action taken on the death of an investor be repaired under the simplified voiding rules?
Yes, in certain circumstances, errors may be rectified under the simplified voiding rules provided they meet HMRC’s criteria.
What action should an ISA manager take if a small number of repairable breaches are identified during routine checks?
The ISA manager should correct the breaches promptly and document the corrective actions taken to ensure compliance.
What are the reporting obligations of an ISA manager regarding non-compliant accounts?
ISA managers must report non-compliant accounts to HMRC and take corrective actions as required.
What is the process for transferring an ISA to another provider?
The investor must submit a transfer request, and the original provider must transfer funds within a set timeframe while maintaining compliance with HMRC rules.
What happens to an ISA when the account holder dies?
The ISA continues to benefit from its tax-free status for a limited time, after which it must be closed or transferred according to inheritance rules.
What documentation must be provided when an ISA is transferred?
A transfer history form and full account records must be provided to the new provider.
What are the consequences of failing to report an annual return on time?
The provider may face penalties or sanctions from HMRC, including the loss of ISA management privileges.
Can an ISA be reinstated after it has been voided?
In some cases, an ISA can be reinstated if the issue was administrative and meets HMRC’s criteria for correction.
What are the requirements for re-registering an ISA?
Re-registration requires submission of updated investor details and confirmation that the account meets HMRC requirements.
How should incorrectly allocated subscriptions be handled?
The error should be corrected immediately, and any necessary amendments should be reported to HMRC.
What is the penalty for exceeding ISA subscription limits?
Excess subscriptions must be removed, and tax benefits may be lost on the excess amount.
What investor details must an ISA provider verify?
Name, date of birth, National Insurance number, and UK residency status.
What happens if an ISA provider fails an HMRC compliance check?
The provider may be required to correct breaches, face penalties, or in severe cases, lose their ISA management status.
What is an Additional Permitted Subscription (APS) in relation to ISAs?
An APS allows a surviving spouse or civil partner to make additional ISA subscriptions using the deceased investor’s allowance.
What records must an ISA manager keep for HMRC audits?
Application forms, subscription details, transfer records, and compliance documents must be retained.
How does HMRC communicate compliance failures to ISA providers?
Through formal notices, requiring corrective actions and potential penalties.
What is the deadline for submitting the annual ISA return?
The return must be submitted by the deadline set by HMRC each year, typically within a few months after the tax year ends.
Can an ISA be transferred overseas?
No, ISAs can only be transferred between UK-registered ISA providers.
