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HMRC tells kick-out firms to wait for its Isa review

HM Revenue & Customs has told Isa managers to take “no further action” to identify any holdings of kick-out plans following a warning about their Isa eligibility in a recent industry bulletin.

HMRC’s Isa bulletin 19 in March, warned that some plans with a kick-out feature within an Isa that could allow the plan to mature early and within the five-year term may not qualify for Isa status.

It asked managers offering stocks and shares Isas to contact them it they were holding kick-out plans within an Isa wrapper.

But in another update last week, HMRC told Isa managers to take no further action until it has considered a number of representations about its interpretation of the rules and concluded its review.

Last week, Investec Structured Products said it is reviewing the position of its Morgan Stanley and RBS kick-out plans following bulletin 19 but does not foresee any issues affecting them. It says HMRC has confirmed the “Investec version” of its enhanced kick-out plan is Isa-compliant so this option has not been withdrawn but stressed this is still under review pending further clarification.

Head of intermediary sales Gary Dale “It is always possible that HMRC can change their stance but I believe that any changes will not be applied retrospectively to us.”

Meteor Asset Management has held off offering an Isa option for its new top 10 kick-out plan which launched last week until HMRC clarifies the issue. Broker relationship manager Matthew White says: “We have an Isa version prepared should we hear definitively that the underlying securities are suitable for an Isa but we thought it best to be safe rather than sorry at this point.”


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