HM Revenue & Customs is spending an estimated £3m on new technology for Lifetime Isa reporting, which is predicted to put pressure on providers offering the product.
The Lifetime Isa officially launched on 6 April, however many providers are not yet offering the product.
Altus Business Systems director Ben Cocks says that the new Lifetime Isa reporting requirements will use new technology that will give real-time responses and updated authentication processes, which will be a significant change from the format for current Isas.
However, Cocks says this also places an obligation on providers to “up their game”.
He says: “As well as reporting much more frequently to HMRC, providers must also bind HMRC communications more tightly into their processes. For instance, HMRC will be able to reject the opening of an account or a transfer in from another Lifetime Isa in real time and will expect the provider to react accordingly.”
The new Lifetime Isa reporting regime will not be fully operational until April 2018 and Cocks predicts it could be rolled out across other Isa products in the future as well.
He says: “The first year of Lifetime Isa operations is a transitionary period with reporting limited to handling a few exceptional events such as the death or terminal illness of a customer. In the meantime, there are interfaces to be defined, systems to build and processes to change. And no doubt plenty of debate between HMRC and the industry along the way.”