HMRC clarification on eMoney providers.
HMRC’s recent clarification on holding ISA subscriptions with eMoney providers has major implications for the industry.
On 17 January 2019 HMRC clarified in ISA Bulletin 78 that ISA subscriptions cannot be held with eMoney providers.
eMoney offers investment managers and P2P platforms an easy way to give investors an individual wallet in which they can deposit funds. Firms have often used eMoney providers as they are simple to use and are often technically sophisticated. For example, each investor may have an individual account number and fund transfers can be accessed and executed in real-time.
HMRC have confirmed that ISA funds need to be held in accordance with the Income Tax Act 2007 ie “cash subscriptions and other cash held by an ISA account manager must be deposited in an account with a deposit taker.”
The Client Assets FCA Handbook (CASS) defines how investors’ funds should be held by regulated firms. The obligations for firms who hold investors’ funds are significant:
- Specific regulatory permission is needed to hold and/or control client money
- The firm must appoint a person to the CASS Oversight Operation Function (CF10a)
- The firm must ensure they have an appropriately designated client money account and register this with the FCA
- The firm must ensure they have appropriate Client Money controls and processes in place
- The firm must appoint an external auditor to review the CASS processes
Additionally, firms who have traditionally used eMoney providers and are used to the sophistication of the technology (e.g. API access and real time updates) may struggle to find a banking provider that offers analogous functionality.
Goji’s Platform gives firms a sophisticated technology base to offer both ISA and general investment accounts. Our platform is backed by an FCA regulated client money account with real-time API-based access to investors’ funds, ISA management, automated KYC and online ISA transfers.
To find out more, please visit https://www.goji.investments/platform-technology/ or contact [email protected]