Guidance

Tax-free savings newsletter 3 – October 2021

Published 15 October 2021

1. Audits of ISA managers

In previous newsletters, we’ve told you that we’d be reinforcing Individual Savings Accounts (ISA) compliance processes with an expanded programme of audits of ISA managers. We’ll be starting this programme over the next few weeks. The audit is designed to check that you’ve managed the ISA scheme in accordance with the ISA regulations.

We may carry out audits remotely or in person at the ISA manager’s premises (or the premises of a third party if that is where the ISAs are administered). If we carry out an audit remotely, we’ll ask for information and documents in advance of the audit. We’ll always give you a minimum of 2 weeks’ notice before an audit, if it’s a physical inspection or a remote, desk-based audit.

Audits will normally include checks of:

• applications and subscriptions
• returns and repayment claims
• qualifying ISA investments
• terms and conditions
• processes and controls

After we’ve completed the audit, we’ll write to you within 28 days to confirm if any further action is required.

If we identify breaches of the ISA regulations during an audit, we’ll discuss these with you. Breaches will be dealt with in accordance with the regulations and published guidance. For more information check the Guidance for ISA managers – HMRC inspections of ISA managers.

If you discover breaches outside of an audit, email: savings.compliance@hmrc.gov.uk

2. Changes to the Guidance for ISA managers – HMRC inspections of ISA managers

We’ve updated the guidance on HMRC inspections of ISA managers to reflect that audits can be carried out remotely or in person. We’ve also removed some checks that are no longer relevant.

The language used on the guidance page has been updated to meet current Government Digital Standards.

3. List of approved ISA managers

We’ve made a small change to the format of the list of approved ISA managers to make it easier to identify the updates that have been made each month.

We’ll now include a table of ‘Recent changes’ at the end of the list, so that you can see what has been added, removed or amended.

You’ll see these changes on lists published from 1 October 2021 onwards.

4. Lifetime ISA digital service

We’d like to clarify some points around Lifetime Individual Savings Accounts (LISA) reporting.

ISA managers who offer LISAs to investors can report information and transactions to HMRC through the LISA Application Programme Interface (AP1). The information that can be reported includes:

• reporting a new LISA investor to HMRC
• creating, transferring and making changes to a LISA account
• reporting details of an investor life event, for example withdrawals for a first-time residential purchase
• requesting the payment of bonus payments and reporting withdrawal changes
• submitting end of year LISA information returns

You need to make sure that accurate information is reported to HMRC so that your accounts and investors comply with LISA rules.

4.1 Date of first LISA payment

ISA managers should report the creation of the LISA account and date of first payment to HMRC. The LISA account is created when this first payment is made. You should only change the date of an investor’s first LISA payment to correct an error made when the original date of the first payment was reported.

Changing the date of an investor’s first payment could prevent a ‘charge-free’ withdrawal for a first-time residential purchase. This could result in the voiding of the LISA if the investor has a LISA with another manager. The date of an investor’s first payment should not be changed by an ISA manager who has accepted a LISA transferred in from another ISA manager.

4.2 Bonus claims

LISA bonus payments are paid in a single payment by HMRC for each monthly claim period covering the 6th of Month A to 5th of Month B. Payments from HMRC include:

• new government bonus payment requests
• corrected government bonus payment requests when an additional bonus is due
• corrected withdrawal charges when part of an incorrect withdrawal charge needs to be refunded

If you’re reporting a bonus claim after the end of the monthly reporting period, this will not be paid until the end of the next monthly reporting period. A single payment will be made for any successful bonus payments that are due.

ISA managers should make sure that payments made into a LISA are eligible for a government bonus before submitting their monthly bonus claim. Where data on a bonus claim is identical to a previous claim, the claim will be unsuccessful, and an error response will be returned. Repeated attempts to submit bonus claims that are identical to previously submitted claims will also be unsuccessful.

4.3 Errors in LISA reports to HMRC

HMRC cannot correct errors made in reports submitted by LISA providers, this includes errors when:

• reporting details of a new LISA investor
• an account transferred to a new ISA manager is reported as closed by the exporting ISA manager
• the date of the first payment into a LISA was incorrect
• making bonus claims and reporting withdrawal charges to HMRC
• reporting an investor’s first residential property purchase

Find out how to correct errors previously reported to HMRC.

The Lifetime ISA – API document (V2.0) explains the standard HTTP status codes used to show if an API request succeeded or not and includes details of all the LISA API endpoints.

5. Contacting HMRC

If you need to contact HMRC about ISAs, Child Trust Funds (CTFs) or LISAs, email: savings.compliance@hmrc.gov.uk if you want to:

• report errors in managing ISAs (including LISAs) and CTFs
• report non-compliance with ISA or CTF regulations
• send applications for approval to be an ISA manager
• ask about the new list of approved ISA managers
• provide changes to ISA or CTF manager title or other details

Email: savings.audit@hmrc.gov.uk if you want to:

• ask about the ISA and CTF guidance notes and regulations
• ask about ISA 10 and ISA 14 repayment claims
• submit your annual ISA and Junior ISA statistical returns

If you have a query that does not relate to any of the above, email your query to: enquiries.savings@hmrc.gov.uk