Statements required from beneficiaries under a policy
A statement is required where:
- a policy is issued on or after 6 April 2013,
- a policy is varied on or after 6 April 2013 and the premium period is lengthened or the premiums payable are increased,
- a policy issued before 21 March 2012 is varied on or after 6 April 2013 such that the premium period is lengthened or shortened or the premiums payable are increased or decreased,
- a qualifying policy is assigned to someone else on or after 6 April 2013 and the assignment is an excluded one,
- upon inheritance following the death of a beneficiary under a policy on or after 6 April 2013.
A statement is not required in the following circumstances:
- on the issue of a policy where the statement information has already been provided to the issuer and that information has not changed in the interim,
- on assignment of a share in rights under a policy an existing beneficiary has previously made a statement for that policy and the information has not since changed,
- following a deceased beneficiary event if before the event the beneficiary under the policy was already a beneficiary under that policy,
- on assignment which is for security on a debt or on discharge of a debt,
- on assignment as part of legally enforceable obligation relating to a divorce or dissolution of a civil partnership and the policy is to pay off an interest only mortgage,
- on assignment to the personal representatives of a deceased individual.
A statement is only required following the first variation that makes a policy a RRQP. A statement is not required following any further variations that would otherwise require a statement. For example, if a protected policy is varied after 5 April 2013 such that premiums increase to £4,000 then a statement is required and the policy becomes RRQP from the date of change. If the policy is then varied again so that premiums increase to £5,000 then no further statement is required upon this second variation.
Who makes a statement?
Statements are to be made by each individual who is a beneficiary under the policy (see IPTM2071). If, for example, there are three beneficiaries then if one fails to make a statement when required to do so this would make the policy non-qualifying.
Minors will usually be represented by a person who has parental responsibility over them and such a person may make a statement on behalf of the minor.
To whom must the statement be made?
The statement must be made to the insurance company that provided or is providing the qualifying policy. The only exception to this would be where the original insurer had transferred their business to another insurer. In this case a statement should be made by the insurer to whom the business has been transferred.
The statement must be made within 3 months of the event noted above having taken place.
If the time limit for making a statement has expired the policy will automatically become a non-qualifying policy. A policy’s status is not decided until the required statement is submitted. If it is not submitted, then it is confirmed as non-qualifying on the date the deadline for submitting the statement expires. The policy becomes wholly non-qualifying from this date, with no relief for periods during which the policy was a qualifying policy.
HMRC will accept late statements by the beneficial owner where there is a reasonable excuse for that individual failing to make the statement. The statement must be made without unreasonable delay after the situation covered by that reasonable excuse ceases to apply. See IPTM2091.
In such cases late statements together with an explanation of why the statement was made late should be sent to:
HM Revenue & Customs
BAI Financial Services Team
4th Floor Meldrum House
15 Drumsheugh Gardens
Should HMRC accept the late statement, the individual will need to send the statement, alongside confirmation from HMRC the late statement has been accepted, to the insurer.
Incorrect or false statements
If a beneficiary under a policy makes a false/incorrect statement the policy will be incorrectly treated as a qualifying policy when a chargeable event gain arises. If the beneficiary makes an inaccurate self-assessment return or fails to make a self-assessment return as a consequence of this incorrect treatment when he/she is liable to tax he/she will be required to pay the full amount of tax due together with interest and penalties for that inaccuracy or failure.