The Individual Savings Account Regulations 1998

[F1 Application of the provisions of Chapter II of Part XIII of the Taxes Act [F2 and of Chapter 9 of Part 4 of ITTOIA 2005] 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, [F3 falling within section 484(1) of ITTOIA 2005], 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 [F4 and of Chapter 9 of Part 4 of ITTOIA 2005] 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.

[F5 (4) Section 530 of ITTOIA 2005 does not apply to a gain in a case in which paragraph (1) applies.]

(5) Relief under [F6 section 535 of ITTOIA 2005] shall be computed as if paragraph (4) had not been enacted.

[F7 (6) In section 552 of the Taxes Act—

(a) in subsection (1)(b) for the words “policy holder” there shall be substituted “account investor”;

(b) in subsection (3)—

(i) in the words “(or, where the appropriate policy holder is a company, the corresponding financial year)” shall be omitted;

(ii) for the words “the name and address of the appropriate policy holder” there shall be substituted “the name and address of the account investor”;

(iii) the words “and the corresponding financial year,” shall be omitted;

(c) in subsection (5)—

(i) for the words “the appropriate policy holder” there shall be substituted “the account investor”;

(ii) sub-paragraph (b)(ii) shall be omitted;

(iii) paragraph (c) shall be omitted;

(iv) in paragraph (d) the words “except where paragraph (c) above applies,” shall be omitted; and

(v) paragraph (f) shall be omitted;

(d) in subsection (6)—

(i) paragraph (b) shall be omitted;

(ii) for paragraph (c) there shall be substituted—

“(c) if the event is a death, the period of three months beginning with the receipt of written notification of the death;”;

(iii) after paragraph (c) there shall be inserted—

[F8 “(d) if the event is—

(i) a termination event, or

(ii) a chargeable event preceding such a termination event (as mentioned in regulation 36(2) of the Individual Savings Account Regulations 1998),

the period of three months beginning with the date on which the insurer received notice under regulation 9(9)(b) of those Regulations or, if earlier, actual notice of the termination event.”];

(e) in subsection (7)—

(i) in paragraph (a) for the words “assessment, or, where the policy holder is a company, the financial year,” there shall be substituted “assessment”;

(ii) paragraph (b) shall be omitted;

(iii) for paragraph (c) there shall be substituted—

“(c) if the event is a death, the period of three months beginning with the receipt of written notification of the death;”;

(iv) after paragraph (c) there shall be inserted—

[F9 “(ca) if the event is—

(i) a termination event, or

(ii) a chargeable event preceding such a termination event (as mentioned in regulation 36(2) of the Individual Savings Account Regulations 1998),

the period of three months beginning with the date on which the insurer received notice under regulation 9(9)(b) of those Regulations or, if earlier, actual notice of the termination event.”]; and

(v) in paragraph (d) for the words “paragraph (c)” there shall be substituted “paragraph (c) or (ca)”;

(f) in subsection (8)—

(i) in paragraph (b) for “policy holder” there shall be substituted “account investor in respect”;

(ii) in paragraph (c) the words from “or” to the end of the paragraph shall be omitted;

(g) in subsection (9) the words “or financial year” shall be omitted in each place where they occur;

(h) in subsection 10—

(i) before the definition of “amount” there shall be inserted—

• ““account investor” has the same meaning as in the Individual Savings Account Regulations 1998;”;

(ii) the definition of “appropriate policy holder” shall be omitted;

(iii) the definition of “financial year” shall be omitted;

(iv) for the definition of “the relevant year of assessment” there shall be substituted—

• ““the relevant year of assessment”, in the case of any gain, means the year of assessment to which the gain is attributable;”; and

(v) after the definition of “section 546 excess” there shall be inserted—

• ““termination event” has the same meaning as in the Individual Savings Account Regulations 1998;”; and

(i) subsection (11) shall be omitted.]

[F10 (6A) In section 552ZA of the Taxes Act—

(a) in subsection (2)(b) the words “or an assignment” shall be omitted; and

(b) subsections (3) and (4) shall be omitted.]

F11 (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) The account manager shall account for and pay income tax at the [F12 lower] 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 [F13 lower] 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

F2 Words in reg. 36 title inserted (6.4.2008) by The Individual Savings Account (Amendment) Regulations 2008 (S.I. 2008/704), regs. 1, 17(2)

F3 Words in reg. 36(2)(b) substituted (6.4.2008) by The Individual Savings Account (Amendment) Regulations 2008 (S.I. 2008/704), regs. 1, 17(3)

F4 Words in reg. 36(3) inserted (6.4.2008) by The Individual Savings Account (Amendment) Regulations 2008 (S.I. 2008/704), regs. 1, 17(4)

F5 Reg. 36(4) substituted (6.4.2008) by The Individual Savings Account (Amendment) Regulations 2008 (S.I. 2008/704), regs. 1, 17(5)

F6 Words in reg. 36(5) substituted (6.4.2008) by The Individual Savings Account (Amendment) Regulations 2008 (S.I. 2008/704), regs. 1, 17(6)

F7 Reg. 36(6) substituted (with effect in accordance with reg. 1 of the amending S.I.) by The Individual Savings Account (Amendment) Regulations 2002 (S.I. 2002/453), reg. 5(2)

F8 Words in reg. 36(6)(d) substituted (8.1.2003) by The Individual Savings Account (Amendment No. 3) Regulations 2002 (S.I. 2002/3158), regs. 1(2), 8

F9 Words in reg. 36(6)(e) substituted (8.1.2003) by The Individual Savings Account (Amendment No. 3) Regulations 2002 (S.I. 2002/3158), regs. 1(2), 8

F10 Reg. 36(6A) inserted (with effect in accordance with reg. 1 of the amending S.I.) by The Individual Savings Account (Amendment) Regulations 2002 (S.I. 2002/453), reg. 5(3)

F11 Reg. 36(7) omitted (with effect in accordance with reg. 1 of the amending S.I.) by virtue of The Individual Savings Account (Amendment) Regulations 2002 (S.I. 2002/453), reg. 5(4)

F12 Word in reg. 36(8) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Individual Savings Account (Amendment No. 2) Regulations 2004 (S.I. 2004/2996), regs. 1(1), 22

F13 Word in reg. 36(9)(a) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Individual Savings Account (Amendment No. 2) Regulations 2004 (S.I. 2004/2996), regs. 1(1), 22