Child Trust Fund (CTF) Bulletin Number 9 - February 2006

The CTF Bulletin keeps CTF providers informed of any new developments relating to the CTF scheme. Please ensure the appropriate people in your organisation read it.

What this Bulletin contains

This Bulletin contains articles on

• Amendments to the CTF regulations

Enquiries on this bulletin should be addressed to

HM Revenue & Customs
SPS Technical
St John’s House
BOOTLE
Merseyside
L69 9BB

Telephone 0151 472 6022

email: Paul Blackwell

Amendments to the CTF regulations

The CTF regulations will shortly be amended by the Child Trust Fund (Amendment) Regulations 2006. The amendments will come into effect on 7 February 2006. A copy of the amending regulations (PDF 18K) is available. See the Explanatory Memorandum (PDF 17K) and commentary.

The amendments have been laid in response to feedback from providers, who have found that contrary to expectations a substantial number of parents were waiting until the last few days before expiry of the voucher before attempting to open a CTF account for their child. Where the CTF application was completed by internet or telephone the voucher would often arrive at the provider after the expiry date, which meant that the application had failed.

The amendments allow a 7 day period after the expiry date for the parent to get the voucher to the provider.

The current position is that all of the following three conditions must be satisfied before a CTF account is regarded as open:

a. the provider has possession of the voucher on or before the expiry date
b. the applicant has entered into a management agreement with the provider, and
c. any cooling-off or cancellation period has expired.

The key condition is that the voucher has to be in the possession of the provider on or before the expiry date.

Under the amended rules the three conditions that must be satisfied are

a. the provider has possession of the voucher no later than seven days after the expiry date
b. the applicant has entered into a management agreement with the provider on or before the expiry date, and
c. any cooling-off or cancellation period has expired.

There will be two key conditions – the applicant must have entered into a management agreement with the provider on or before the expiry date, and the voucher must be in the possession of the provider no later than seven days after the expiry date.

In practice this change will mainly affect providers who accept internet or phone applications. They must ensure that the application has been completed and accepted by the provider on or before the expiry date, and that the voucher is received no later than 7 days after the expiry date. An application accepted after the expiry date is invalid, as is a voucher received later than seven days after the expiry date. In either case a CTF account cannot be opened.

The new rules come into effect on the 7th February 2006, but providers can, if they wish, apply the new rules immediately.

The following paragraphs have been amended:

paragraph 4.1.5
paragraph 4.7.3
paragraph 4.11.2
paragraph 4.13.5
paragraph 4.13.6
paragraph 4.14.1

The amended version of the CTF Guidance notes is available on the “Information for CTF providers” page of the website.