|
Qardus
Apr 15, 2022 13:00:44 GMT
Post by Ace on Apr 15, 2022 13:00:44 GMT
As a financial product that is designed with the sole intention of allowing one religious group to invest/attract investment I don't think you can differentiate between the financial and religious. They may look similar to other P2P investments but there entire purpose is to avoid interest and HMRC know this. A good Muslim could not invest in or borrow from a P2P company which is why these product exist. The borrower's pay a higher return to avoid paying interest and therefore it would be wrong for investors to consider it as interest. However, do Axia Funder not use SPVs in a similar way? I would have thought that those returns are far more likely to be questioned by HMRC. I have not had any returns from them yet but so here have. Any feedback on those returns? My tax statement from AF has a mixture of interest and dividends. #2312 has the profit described as interest with 20% income tax withheld. #3536 and #2742 have the profit described as a UK company dividend with no deduction of tax. I intend to declare them as described.
|
|
|
Post by Ace on Apr 15, 2022 13:22:55 GMT
The latest IM clearly states that the profits are to be taxed as dividends. I accept that Q may have been badly advised, but I'm happy to use that, along with the fact that all profit payments have been clearly marked as dividends, as evidence to HMRC if required to justify my position, unless billt receives a counter statement before I submit my return. I am not going to rely on Q's description of the payments as "dividends". In financial, as opposed to religious, terms they are clearly the same type of payment as interest and quite unlike dividends. Q also say that investors must get their own tax advice. We need to get a specific ruling from HHMRC. I agree with what you've said. However, without some higher ruling, I'm unsure of the correct position. My thinking is that if I can show that I followed the platform's clear guidance I'm unlikely to get into serious not water with HMRC. If it turns out to be an error and is discovered by HMRC I expect that they would simply ask me to correct it; first offence and all that (though that's really just a gut feeling). The most likely outcome is that nobody will question it. Last year I declared profits from Uown, Property Partner, AxiaFunder and Assetz Exchange to be dividends because that was how the platforms described them. My return was not questioned. That's obviously not proof that any of those were correct. I'd be very interested to hear if anyone has declared any of these as dividends and has had that questioned by HMRC.
|
|
|
Qardus
Apr 15, 2022 14:25:08 GMT
Post by Ace on Apr 15, 2022 14:25:08 GMT
|
|
|
Qardus
Apr 15, 2022 17:24:45 GMT
Post by brummiefred on Apr 15, 2022 17:24:45 GMT
Payments from THC, when there were some, was issued as dividends.
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Qardus
Apr 15, 2022 20:11:46 GMT
Post by littleoldlady on Apr 15, 2022 20:11:46 GMT
As a financial product that is designed with the sole intention of allowing one religious group to invest/attract investment I don't think you can differentiate between the financial and religious. They may look similar to other P2P investments but there entire purpose is to avoid interest and HMRC know this. A good Muslim could not invest in or borrow from a P2P company which is why these product exist. The borrower's pay a higher return to avoid paying interest and therefore it would be wrong for investors to consider it as interest. . I agree that their entire purpose is to avoid interest, and I carefully refrained from saying that the income was interest. My point is that the income bears more similarity to interest than it does to dividends and therefore I would expect HMRC to tax it the same as interest. If a bank or building society started calling its return "Reward" rather than interest would you think that it made any difference to HMRC?
|
|
tallsuk
Member of DD Central
Posts: 142
Likes: 125
|
Qardus
Apr 16, 2022 9:39:10 GMT
Post by tallsuk on Apr 16, 2022 9:39:10 GMT
As a financial product that is designed with the sole intention of allowing one religious group to invest/attract investment I don't think you can differentiate between the financial and religious. They may look similar to other P2P investments but there entire purpose is to avoid interest and HMRC know this. A good Muslim could not invest in or borrow from a P2P company which is why these product exist. The borrower's pay a higher return to avoid paying interest and therefore it would be wrong for investors to consider it as interest. . I agree that their entire purpose is to avoid interest, and I carefully refrained from saying that the income was interest. My point is that the income bears more similarity to interest than it does to dividends and therefore I would expect HMRC to tax it the same as interest. If a bank or building society started calling its return "Reward" rather than interest would you think that it made any difference to HMRC? HMRC is currently quite clear that the personal savings allowance is a tax on interest. If they started calling it a tax on rewards then that would require further clarification. www.gov.uk/apply-tax-free-interest-on-savingsHowever, when it comes to Sharia compliant investments then the wording does not actually matter. Muslims are not allowed to charge or collect interest, regardless of what it is called. These products have been designed to ensure that the Muslim community is not discrimated against by tax laws. HMRC are fully aware of the reasons for this and are happy to allow this for these specific reasons. The Koran was not written in English and it is the concept of interest that was banned under Sharia law. It is also worth remembering that a various times in history usery has been banned for Christians as well, although this was by papal decree and therefore has been removed by later Popes. It is the reason why the Jewish community is often linked with money lenders as this has never been an issue for them. All they did was provide a service that people needed to develop business.
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Qardus
Apr 16, 2022 12:14:45 GMT
Ace likes this
Post by littleoldlady on Apr 16, 2022 12:14:45 GMT
We can discuss it ad nauseum, but it does not matter what our opinions are, it does not even matter what the rights and wrongs are, the only thing that matters is an HMRC ruling. If anyone already has this please share it. Google shows:
“Interest is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another.” 19 Mar 2016
|
|
tallsuk
Member of DD Central
Posts: 142
Likes: 125
|
Qardus
Apr 16, 2022 12:52:02 GMT
Post by tallsuk on Apr 16, 2022 12:52:02 GMT
We can discuss it ad nauseum, but it does not matter what our opinions are, it does not even matter what the rights and wrongs are, the only thing that matters is an HMRC ruling. If anyone already has this please share it. Google shows: “Interest is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another.” 19 Mar 2016 The whole point of Sharia compliant finance is that you are not lending someone money. You set up a business with them which is why dividends are recieved and not interest. www.bankofengland.co.uk/knowledgebank/what-is-islamic-finance
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,886
Likes: 11,109
|
Post by ilmoro on Apr 16, 2022 20:14:04 GMT
We can discuss it ad nauseum, but it does not matter what our opinions are, it does not even matter what the rights and wrongs are, the only thing that matters is an HMRC ruling. If anyone already has this please share it. Google shows: “Interest is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another.” 19 Mar 2016 The whole point of Sharia compliant finance is that you are not lending someone money. You set up a business with them which is why dividends are recieved and not interest. www.bankofengland.co.uk/knowledgebank/what-is-islamic-financeUnder the law Islamic finance structures appear to be considered as alternative finance arrangements and the tax treatment of these is defined under the Income Tax Act 2007. Alternative finance returns are taxed as interest under the ITA2007. Nearly all Islamic finance structures seem to involve an SPV structure to avoid double taxation so the assumption that the returns are dividends as a result is not supported by the evidence. Interestingly there appears to legislation (Alternative Finance (Income Tax, Capital Gains Tax and Corporation Tax) Order 2022) being drafted to allow alternative finance arrangements to be treated as the equivalent of article 36h and amend the relevant legislation relating to tax accordingly. Edit: Again legislation (Finance Acts) seems to indicate that while it may appear to be a distribution by a company ie dividend, as an alternative finance return it excluded from being treated as such www.gov.uk/hmrc-internal-manuals/corporate-finance-manual/cfm44300"Although an alternative finance return is dependent on the result of part of the financial institution’s business it is specifically excluded from being a distribution under CTA10/S1019."
|
|
billt
Posts: 90
Likes: 67
|
Qardus
Apr 17, 2022 11:11:20 GMT
Post by billt on Apr 17, 2022 11:11:20 GMT
I am of the opinion that ilmoro is correct, no reply yet from Qardus (easter) just to add more confusion to the pot has anyone any idea why some of the returns are listed as "profit payments" and others listed as "profit instalments"
|
|
|
Qardus
May 17, 2022 18:32:49 GMT
Post by Ace on May 17, 2022 18:32:49 GMT
I have sent a query to Qardus will report back Did you ever get a response from Qardus?
|
|
billt
Posts: 90
Likes: 67
|
Post by billt on May 18, 2022 11:19:58 GMT
HI Ace, never did get a reply, this was my third query without a reply two on different subjects, worked it out for myself, on my statement they originally stated the return as dividend on the site they worded it as profit, I know that there are different views on how to record it on the tax return but I am going with interest and my accountant has agreed, despite the lack of response very pleased with Qardus, waiting for the next investment.
PS I previously posted under Alibaba but changed to billt nothing nefarious just related to logging in.
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,886
Likes: 11,109
|
Qardus
Jun 15, 2022 6:53:58 GMT
Post by ilmoro on Jun 15, 2022 6:53:58 GMT
|
|
Greenwood2
Member of DD Central
Posts: 4,251
Likes: 2,694
|
Qardus
Oct 5, 2022 16:28:21 GMT
Post by Greenwood2 on Oct 5, 2022 16:28:21 GMT
HI Ace, never did get a reply, this was my third query without a reply two on different subjects, worked it out for myself, on my statement they originally stated the return as dividend on the site they worded it as profit, I know that there are different views on how to record it on the tax return but I am going with interest and my accountant has agreed, despite the lack of response very pleased with Qardus, waiting for the next investment. PS I previously posted under Alibaba but changed to billt nothing nefarious just related to logging in. Do they ever reply to queries?
|
|
|
Qardus
Oct 5, 2022 16:50:18 GMT
Post by Ace on Oct 5, 2022 16:50:18 GMT
HI Ace, never did get a reply, this was my third query without a reply two on different subjects, worked it out for myself, on my statement they originally stated the return as dividend on the site they worded it as profit, I know that there are different views on how to record it on the tax return but I am going with interest and my accountant has agreed, despite the lack of response very pleased with Qardus, waiting for the next investment. PS I previously posted under Alibaba but changed to billt nothing nefarious just related to logging in. Do they ever reply to queries? I usually receive a reply, but seem to recall that one message did go unanswered.
|
|