Keydata update for Cat 2 investors
Keydata customers who invested in Category Two products can expect to receive a letter from the FSCS in early February. The letter will explain how they can make a claim for compensation and will include an FSCS Application Form for claimants to complete and return by 31 March 2010.
This category of claim relates to investments in certain Keydata ISA products which were sold to investors on the basis that they were eligible to be included in an ISA wrapper, but which have since been confirmed not to qualify for ISA tax exemptions. This means that affected investors are liable to pay income tax on any interest received in respect of the investment from 8 June 2009 (the date Keydata was placed into administration) up until the maturity date or date of disposal of the investment (if earlier).
The FSCS has now agreed a process with HM Revenue and Customs (HMRC) and PricewaterhouseCoopers LLP (Keydata’s Administrators), to pay directly to HMRC any compensation due to eligible Category Two investors in relation to the tax liability. Where the FSCS pays compensation in this way, the claimant will not be required to report to HMRC the interest received in respect of the Category Two investment, or to pay any tax due.
Any Keydata customer who invested in a Category Two product who has not received a letter by 13 February 2010 should contact the FSCS.
It is important that claimants complete and return their FSCS Application Form by 31 March 2010 to enable the FSCS to include their claim in the arrangement agreed with HMRC and the Administrators.
The FSCS previously issued a Keydata update on 23 December 2009.
Tax guidance for Keydata investors from HMRC
HMRC has previously published details of the tax implications for Keydata investors. This information can be found on HMRC’s website.
For further details about the Administrators' work, including a comprehensive list of Keydata products affected by the ISA issues, please refer to www.pwc.co.uk/KIS.