Does a payment made & withdrawn from a flexible IFISA count?

I think the answer is no, as you have subscribed to a current year ISA even if you subsequently withdrew it. The rules do allow you to subscribe to a current year ISA, withdraw the funds  and subscribe them to a different type of ISA but not ISTM to a another ISA of the same type.

The HMRC guidance is 

"Withdrawals of current year subscriptions, can effectively be replaced in any current year ISA, but cannot breach the ‘one ISA of each type per tax year’ rule."


The relevant HMRC example is




The key phase is 'his cash ISA' as in the existing one, not any, as with the other types

There is a section on transfers & the information X needs to provide to Y including advising on £nil subscriptions where all current year funds have been withdrawn. If you were allowed to open a different IFISA having subscribed & withdrawn from an IFISA this section would appear to be redundant so its existence suggests you cant open two IFISA with current year funds. It does suggest that you could open X, withdraw the funds, transfer X to Y and deposit the funds in Y but again not advice, get advice from HMRC.

However, I dont think it is entirely clear cut, HMRC is somewhat vague so you would need to seek clarification as none of us can offer financial or tax advice. 

I assume no income was earnt on the initial subscription as that would have to be returned to the original IFISA or lose its tax status as sums over & above the sum subscribed cant be paid in elsewhere without counting as further subscriptions

2. Unclear though they would likely report subscription as £NIL but also the date of first subscription. There doesnt appear to be a requirement to state what activity has occurred, merely net subscription, subscription date & ISA flexibility. HMRC would therefore receive notification of 2 IFISA for the current year, with two subscription dates, flagging an issue 

Some transfers are very quick (a couple of days). We might be able to give some idea if X and Y were identified. 

I cannot give advice, but this is what they said to me when i opened 8 P2P ifisa in one tax year. And i never heard another word. I haven't done it since, i didn't set out to break the rules, but if i wanted to put money into two of the same type up to the £20k limit, i would. 

"When more than one of the same type of ISA has been paid into in a tax year, there is no need for the taxpayer to try and correct the situation.

I spent time researching this issues a couple of years ago when I opened one IFISA (without depositing cash), but changed my mind and wanted to open a different IFISA in the same tax year.  From the research I did at the time reading the ISA manager's manual and other guidance, I concluded that the deposit of cash is the trigger for a recorded subscription and the point after which you would be deemed to have subscribed to an IFISA irrespective of whether these funds are subsequently deployed in investments or withdrawn.