ISAs - a cautionary tale

I guess this is both a cautionary tale and a plea for help, as I feel that I have been "set up" and then mugged by an organisation that ruthlessly punishes mistakes and uses the full force of a law that was introduced for other purposes, but is now used to punish the ignorant citizen. I'm sure that you can guess the organisation that I'm referring to.

As the end of March approaches, you will be brain washed by TV programmes (and Martin Lewis in particular) telling you to make sure that you use your ISA allowance before April 5th, as an ISA is "just a savings account that you don't pay tax on". It's the best thing since sliced bread.

However, there is more to an ISA than meets the eye, and you really should know about these things, as ISAs should come with a health warning attached. Summarised below are the key points.

1. An ISA is linked to a National Insurance to make sure that each person does not go above his / her annual limits.

2. HMRC have access to the interest paid on an ISA, and presumably to the totals within an ISA.

3. ESA Benefits are linked to a National Insurance number.

4. The HMRC and DWP computers talk to each other and can cross check based on the NI number, identify if a claimant in receipt of benefits has savings greater than the amounts alllowed.

5. ISA rules state that the person in whose name the ISA is held is both the "legal and beneficial" owner of the money in that ISA, in other words it "totally belongs to that person", regardless of the reality of the situation.

6. HMRC rules state that it is not possible for money in an ISA to be held on behalf of another person.

Points 5 and 6 were introduced to stop rich people from recruiting an army of poor people to open ISAs, then paying them a few pounds a year to store the rich person's money in the ISA, thus avoiding higher rate tax on the interest.

However, the DWP have cottoned onto this law and if they find money in an ISA of a claimant, they will ruthlessly apply the law in order to stop benefits and claw back the oeverpayments. They will ignore all other considerations in the matter, and will just shrug their shoulders and say " the law states ..... you lose".

To cut a long story short, I am the appointee of an adult son with severe learning difficulties due to Fragile X syndrome. He was in receipt of ESA and was in the support group.

To my eternal shame, I had been unaware of the rules regardind the effect of capital on ESA (a means tested benefit) and had stupidly paid money into an ISA in his name which over the years had grown into an amount that has now stopped his benefits and will almost certainly trigger a large bill for overpayments which will efffectively wipe out the ISA.

Having just taken the case to an appeals tribunal, the (hard but fair) judge's summary stated that I'd done everything in the "very best interests" of my sons future, but as he can only rule on the law, he is forced to agree with the DWP and find against me.

As you can imagine, I have been "beating myself up" for the last few months wondering how I could have been so stupid that I was unaware of this legislation, but then I discovered that the DWPs own guidelines stated that an appointee must be interviewed prior to appointment so that the he / she can be taken through the roles and responsibilities of an appointee.

I had absolutely no recall of this interview, and, and after requesting the BF56 original forms can now absolutely prove that neither I nor my son was ever interviewed, the entire procedure had been carried out by post.

This meant that I was denied the chance to find out what I needed to know, and with not a mention of the capital rules on any written information sent to me (not even any small print), I just didn't know.

In fairness to the appeals judge, he did make this point strongly on his summary, but I doubt that it will carry any weight in the overall scheme of things.

So, in summary, the DWP recruited me as an unpaid volunteer ( without me they would have had to have appointed a professional) , gave me no training, denied me the information I needed to know, then threw the book at me when I made an accounting error.

Why would they not take their own failures into account when making their final conclusions (they just seem to ignore the evidence) , as giving someone the legal right to spend another persons' benefits is a pretty serious thing to do, and the personal interview surely MUST be done?

Any advice would be greatly appreciated. Thanks.

Thank you, I've now changed the name.

Essentially the query was regarding the issue over the importance of the lack of interview prior to becoming an appointee, and should this ommission not go some way towards being a contributing factor in the final decision?

The DWP rules are very clear that a prospective appointee must be personally interviewed and that proof of indentity must be produced. They also state that the prospective appointee must have the "roles and responsibilities of an appointee" explained fully to him at the interview.

I think that if you're going to be an unpaid volunteer for an organisation, they should at least give you the training and the information that you need to carry out the role successfully, and that when the organisation fails to do this, they shouldn't really punish the volunteer with the maximum penalty when he makes a single mistake due to ignorance, caused by that lack of training.

Maybe I'm just being naive .....

Thankyou for your help.

QX81 wrote: Thank you, I've now changed the name.

Essentially the query was regarding the issue over the importance of the lack of interview prior to becoming an appointee, and should this ommission not go some way towards being a contributing factor in the final decision?

The DWP rules are very clear that a prospective appointee must be personally interviewed and that proof of indentity must be produced. They also state that the prospective appointee must have the "roles and responsibilities of an appointee" explained fully to him at the interview.

I think that if you're going to be an unpaid volunteer for an organisation, they should at least give you the training and the information that you need to carry out the role successfully, and that when the organisation fails to do this, they shouldn't really punish the volunteer with the maximum penalty when he makes a single mistake due to ignorance, caused by that lack of training.

Maybe I'm just being naive .....

Thankyou for your help.

Just a couple of question because I don't fully understand your situation & how it would have affected the tribunal case.

1: Are you saying you didn't have a clue as what being an appointee meant & didn't receive the very detailed letter which the DWP issue to appointees, explaining your appointee duties?

2: How would the lack of knowledge about appointee duties affect whether or not you put as ISA into you son's name?