IPTM2090 - Statements required from beneficiaries under a policy

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ICTA88/SCH15/PARAB3

A statement is required:

  • where a policy is issued on or after 6 April 2013
  • where a policy is varied on or after 6 April 2013 and the premium period is lengthened or the premiums payable are increased
  • where a policy issued before 21 March 2012 is varied on or after 6 April 2013 such that the premium period is lengthened or shortened or the premiums payable are increased or decreased
  • in certain cases where a qualifying policy is assigned to someone else on or after 6 April 2013 and the assignment is an excluded one – see IPTM2081
  • upon inheritance following the death of a beneficiary under a policy on or after 6 April 2013.

A statement is not required in the following circumstances:

  • on the issue of a policy where the statement information has already been provided to the issuer and that information has not changed in the interim
  • in case of mortgage endowment policies, where premiums are increased as a result of a mandatory increase – see IPTM2050
  • on assignment of a share in rights under a policy where an existing beneficiary has previously made a statement for that policy and the information has not since changed
  • on an excluded assignment – see IPTM2081 – if, before the event, the policy was a protected policy that had been made paid-up
  • following a deceased beneficiary event – see IPTM2081 – if, before the event, the beneficiary under the policy was already a beneficiary under that policy
  • following a deceased beneficiary event if, before the event, the policy was a protected policy that had been made paid-up
  • on assignment which is for security on a debt or on discharge of a debt
  • on assignment as part of legally enforceable obligation relating to a divorce or dissolution of a civil partnership and the policy is to pay off an interest only mortgage
  • on assignment to the personal representatives of a deceased individual.

A statement is only required following the first variation that makes a policy a RRQP. A statement is not required following any further variations that would otherwise require a statement. For example, if a protected policy is varied after 5 April 2013 such that premiums increase to £4,000 then a statement is required and the policy becomes RRQP from the date of change. If the policy is then varied again so that premiums increase to £5,000 then no further statement is required upon this second variation.

Note that this only applies to subsequent variations of a RRQP. A statement will still be required for the following events on a RRQP after 5 April 2013:

  • an assignment that falls within ICTA88/SCH15/PARAB2(3)(c) to (g) or (5) – see IPTM2081, or
  • a deceased beneficiary event.

Following either event, if the beneficiary of a RRQP:

  • exceeds the premium limit, the policy becomes non-qualifying
  • remains within the premium limit, the policy remains a RRQP but a further statement will still be required on any subsequent event listed at the top of this page.
Who makes a statement?

Statements are to be made by each individual who is a beneficiary under the policy – see IPTM2071. If, for example, there are three beneficiaries then if one fails to make a statement when required to do so this would make the policy non-qualifying.

Minors will usually be represented by a person who has parental responsibility over them and such a person may make a statement on behalf of the minor.

To whom must the statement be made?

The statement must usually be made to the insurance company or friendly society that provided or is providing the qualifying policy. However, where the original insurer had transferred their business to another insurer, a statement should be made to the insurer to whom the business has been transferred.

Time Limit

The statement must be made within 3 months of the event noted above having taken place.

If the time limit for making a statement has expired, the policy will automatically become a non-qualifying policy. A policy’s status is not decided until the required statement is submitted. If it is not submitted, then it is confirmed as non-qualifying on the date the deadline for submitting the statement expires. The policy then becomes wholly non-qualifying with no relief for periods during which it was a qualifying policy.

Example

Jayne has a qualifying policy. She varies her policy to increase the premiums payable on 1 September 2020. This is an event that requires a statement. Jayne has until 1 December 2020 to submit her statement, however she doesn’t meet the deadline. If there is no reasonable excuse for her failure to submit a statement (see IPTM2091), then her policy becomes non-qualifying. It is non-qualifying from the date she took out the policy, not just from 1 September 2020, the date of the variation.

Extension to the time limit

HMRC will allow the insurer to accept late statements by the beneficial owner where there is a reasonable excuse for that individual failing to make the statement on time. The request for an extension must be made without unreasonable delay after the situation covered by that reasonable excuse ceases to apply. See IPTM2091.

Should HMRC accept the request for an extension, the individual will need to send the statement, alongside confirmation from HMRC the late statement can be accepted, to the insurer.

Requests for an extension should be made to the Financial Services Team by email to ps.andpa@hmrc.gov.uk or by post to the following address:

HM Revenue & Customs
BAI Financial Services Team 3/64
100 Parliament Street
London
SW1A 2BQ

Where possible, please send applications by email as due to current working arrangements applications by post are likely to be delayed. However, requests should only be emailed if the individual accepts the risks of electronic correspondence, such as the possibility of data being intercepted.

Information required

HMRC will require the following information to review a request:

1. The beneficiary’s name and National Insurance number (if there is more than one beneficiary, details of all beneficiaries).

2. Name of the insurer and policy number.

3. Details of the event causing a statement to be required. Please include:

a) the date of the event which caused a statement to be required

b) the nature of the event, for example an increase in premiums payable or an assignment into a trust

c) the deadline for the statement to be returned to the insurer

d) the date of the letter informing the individual of the need to return the statement

e) if applicable, the date the statement was returned to the insurer

f) the date of the letter informing the individual that the policy was now non-qualifying

g) the dates of any interactions between the individual and the insurer in relation to the statement, not already covered above.

4. The reason the beneficiary did not return the statement by the deadline.

5. A copy of the completed statement, if one is available.

6. Any additional information, correspondence, documents or facts in support of the request for an extension, which would allow HMRC to consider whether a reasonable excuse existed for the failure to submit a statement on time and whether the request has been made without unreasonable delay.

Submitting a request on behalf of the beneficiary

If a request for an extension is submitted on behalf of the beneficiary, HMRC will require the beneficiary’s authorisation for the third party to act on their behalf. This can be provided in the form of a short signed statement, for example in the following format: “I authorise [name of the authorised person] to liaise with HM Revenue and Customs on my behalf in relation to my insurance policy number [policy number] with [name of the insurer]”.

An authorisation will also be required in situations where a beneficiary makes a request on their own behalf, as well as on the behalf of other beneficiaries under the same policy.

If a permanent agent authorisation is in place there is no need to provide a separate authorisation statement.

Incorrect or false statements

The fact that HMRC has granted an extension is not confirmation that the policy meets the criteria to remain qualifying. It is the beneficiary’s responsibility to ensure the information provided in the statement is correct so that the insurer can ascertain whether the policy meets the relevant criteria.

If a beneficiary makes a false/incorrect statement the policy will be incorrectly treated as a qualifying policy when a chargeable event gain arises. If the beneficiary makes an inaccurate self-assessment return or fails to make a return as a consequence of this incorrect treatment when they are liable to tax, they will be required to pay the full amount of tax due together with interest and penalties for that inaccuracy or failure.

An individual may make a statement that is correct and complete to the best of their knowledge at the time of the event, but subsequently realise that the information included is incorrect. An individual may submit a revised statement at any point during the life of the policy.