The Individual Savings Account Regulations 1998

[F1 Application of the provisions of Chapter II of Part XIII of the Taxes Act to policies where an investor ceases to be or was not entitled to relief from tax U.K.

36.— (1) This paragraph applies to a case where–

(a) an event specified in regulation 9(8) has occurred in relation to a policy of life insurance, and

(b) a termination event within the meaning given by regulation 9(7) occurs in relation to that policy.

(2) Where–

(a) there is a case to which paragraph (1) applies, and

(b) a chargeable event in relation to the policy, within the meaning given by section 540 of the Taxes Act, has occurred prior to the time at which the termination event mentioned in paragraph (1)(b) occurs,

the account investor shall cease to be, and shall be treated as not having been, entitled to relief from tax under regulation 22(1)(a)(v), in respect of gains treated as arising on the occurrence of any chargeable event mentioned in sub-paragraph (b).

(3) The provisions of Chapter II of Part XIII of the Taxes Act shall apply, in a case to which paragraph (1) applies, to–

(a) the termination event mentioned in paragraph (1)(b), and

(b) any chargeable event mentioned in paragraph (2)(b),

with the modifications provided for in regulation 35(7) and paragraphs (4) to (7) of this regulation, and the account investor and the account manager shall account to the Board in accordance with this regulation for tax from which relief under regulation 22(1)(a)(v) has been given on the basis that the account investor was so entitled, or in circumstances such that the account investor was not so entitled.

(4) In section 547(5) of the Taxes Act, for the words after “total income” (where it first appears) there shall be substituted the words “that gain shall be chargeable to tax under Case VI of Schedule D”.

(5) Relief under section 550 of the Taxes Act shall be computed as if paragraph (4) had not been enacted.

(6) In section 552(1) of the Taxes Act–

(a) after the words “notification thereof” there shall be added the words “or, if it is an event specified in regulation 9(8) or a termination event, within three months of their receiving written notification or actual notice thereof”;

(b) in paragraph (a) for the words “policy holder” there shall be substituted the words “account investor”.

(7) After section 552(6) of the Taxes Act there shall be inserted–

“(7) In this section “account investor” and “termination event” have the same meanings as in the Individual Savings Account Regulations 1998 and “regulation” means a regulation of those Regulations.”

(8) The account manager shall account for and pay income tax at the basic rate in force for the year of assessment in which the termination event, or the chargeable event mentioned in paragraph (2)(b), occurred, as the case may be, and any amount so payable–

(a) may be set off against any repayment in respect of tax due under regulation 25 or regulation 26 and, subject thereto,

(b) shall be treated as an amount of tax due not later than 6 months after the end of the year in which the event specified in regulation 9(8) came to the notice of the account manager, and

(c) shall be payable without the making of an assessment.

(9) Where tax is charged in accordance with paragraph (3)(a) or (b)–

(a) an assessment to income tax at the basic rate in force for the relevant year of assessment may be made on the account manager or on the account investor, and

(b) an assessment to income tax at the higher rate within the meaning of section 832(1) of the Taxes Act, for that year of assessment, may be made on the account investor,

within five years after the 31st January next following that year of assessment, and regulation 28 shall not apply.]

Textual Amendments

F1 Reg. 36 inserted (6.4.1999) by The Individual Savings Account (Amendment) Regulations 1998 (S.I. 1998/3174), regs. 1, 12