markdirac
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Post by markdirac on Aug 10, 2017 20:42:13 GMT
When (if) we claim tax relief via an HMRC irrecoverable loss, will the value of that irrecoverable loss be the outstanding capital owed to each of us, or the outstanding debt ( = outstanding capital + outstanding interest )?
And if the latter, up until what date can we claim to have been accruing interest?
(That is, if we decided to wait say 5 (or 10) years before finally deciding that x% is irrecoverably lost, and then claiming tax relief, could we claim for the outstanding capital and also for 5 (or 10) years of outstanding interest?
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littleoldlady
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Post by littleoldlady on Aug 10, 2017 20:46:31 GMT
We've had some questions about where MoneyThing ranks relative to our other investors in this loan. MoneyThing's total investment ranks equally with the other investors. MoneyThing has £900,000 out of a total loan of £2,600,000, so will receive (9/26) of the proceeds of any repayments. Within MoneyThing's holding, there are the 2 tranches, with tranche A ranking ahead of tranche B. However, this only affects the order in which MoneyThing investors would be repaid any sums received on the loan - it's just internal to MoneyThing. MoneyThing's total holding is pari passu with all the others.
Also, to be clear, Broadoak holds a first and only charge over the property. Example: -loan defaults and £2,000,000 is recovered. -MoneyThing receives (2,000,000 * 9 / 26) = £692,308 -of this, £600,000 goes to tranche A holders (who are repaid in full), and the £92,308 remaining goes to tranche B holders Sorry - we could have made this clearer in the description and will do our best to do so going forward. From this example ISTM that BO's 5% does not rank behind us. I am not sure if BO's 5% is 5% of £900k or 5% of £2.6m. If it's the former then I would expect BO to get nothing and MT to get a share of 9/25.55 and if the latter then 9/24.7. Am I wrong?
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littleoldlady
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Post by littleoldlady on Aug 10, 2017 20:48:05 GMT
When (if) we claim tax relief via an HMRC irrecoverable loss, will the value of that irrecoverable loss be the outstanding capital owed to each of us, or the outstanding debt ( = outstanding capital + outstanding interest )? And if the latter, up until what date can we claim to have been accruing interest? (That is, if we decided to wait say 5 (or 10) years before finally deciding that x% is irrecoverably lost, and then claiming tax relief, could we claim for the outstanding capital and also for 5 (or 10) years of outstanding interest? I am not an expert but I would be amazed if it was not capital only.
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stokeloans
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Post by stokeloans on Aug 10, 2017 20:54:43 GMT
What is the administrators plan for the site going forward,have they said ?
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ilmoro
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Post by ilmoro on Aug 10, 2017 20:56:04 GMT
When (if) we claim tax relief via an HMRC irrecoverable loss, will the value of that irrecoverable loss be the outstanding capital owed to each of us, or the outstanding debt ( = outstanding capital + outstanding interest )? And if the latter, up until what date can we claim to have been accruing interest? (That is, if we decided to wait say 5 (or 10) years before finally deciding that x% is irrecoverably lost, and then claiming tax relief, could we claim for the outstanding capital and also for 5 (or 10) years of outstanding interest? No. Loss relief is only avaliable on capital losses not any interest foregone as a result of a default www.gov.uk/government/uploads/system/uploads/attachment_data/file/597959/Income_tax_relief_for_irrecoverable_peer_to_peer_loans_FINAL_GUIDANCE__2_.pdfSAIM12030, clause 3 Any outstanding amount of the principal (capital) of a loan made at any time has, on or after 6 April 2015, become irrecoverable.
The loan can be treated as irrecoverable from the point the legal recovery process was initiated SAIM 12050 second paragraph.
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ben
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Post by ben on Aug 10, 2017 21:00:11 GMT
When (if) we claim tax relief via an HMRC irrecoverable loss, will the value of that irrecoverable loss be the outstanding capital owed to each of us, or the outstanding debt ( = outstanding capital + outstanding interest )? And if the latter, up until what date can we claim to have been accruing interest? (That is, if we decided to wait say 5 (or 10) years before finally deciding that x% is irrecoverably lost, and then claiming tax relief, could we claim for the outstanding capital and also for 5 (or 10) years of outstanding interest? You can't claim outstanding interest as a loss, even if it takes a year. You can only claim money you have actually lost. same as ilmoro, what get for typing slow
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ilmoro
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Post by ilmoro on Aug 10, 2017 21:00:16 GMT
We've had some questions about where MoneyThing ranks relative to our other investors in this loan. MoneyThing's total investment ranks equally with the other investors. MoneyThing has £900,000 out of a total loan of £2,600,000, so will receive (9/26) of the proceeds of any repayments. Within MoneyThing's holding, there are the 2 tranches, with tranche A ranking ahead of tranche B. However, this only affects the order in which MoneyThing investors would be repaid any sums received on the loan - it's just internal to MoneyThing. MoneyThing's total holding is pari passu with all the others.
Also, to be clear, Broadoak holds a first and only charge over the property. Example: -loan defaults and £2,000,000 is recovered. -MoneyThing receives (2,000,000 * 9 / 26) = £692,308 -of this, £600,000 goes to tranche A holders (who are repaid in full), and the £92,308 remaining goes to tranche B holders Sorry - we could have made this clearer in the description and will do our best to do so going forward. From this example ISTM that BO's 5% does not rank behind us. I am not sure if BO's 5% is 5% of £900k or 5% of £2.6m. If it's the former then I would expect BO to get nothing and MT to get a share of 9/25.55 and if the latter then 9/24.7. Am I wrong? I think you are wrong, BPF 5% only apples to the MT loan and ranks behind A & B tranche capital. So BPF capital is the last 5% of the 900k referred to in this example.
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Post by sebulon on Aug 11, 2017 5:10:50 GMT
From MoneyThing’s update: “The level of recovery required in order to repay MoneyThing lenders all principal and interest owed to them is substantially lower. Broadoak furthermore has a first loss holding of 5%, subordinated to other MoneyThing lenders”.
I think this is a somewhat misleading after reading section 4 of Administrators Proposals.
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sqh
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Post by sqh on Aug 11, 2017 5:51:42 GMT
What is the administrators plan for the site going forward,have they said ? No, they are just setting out the criteria they use to justify their costs. We won't get any opportunity to discuss their plans, and if we did, they would charge even more.
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tomtom
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Post by tomtom on Aug 11, 2017 6:25:21 GMT
Good morning where can I see the administartors report please?
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archie
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Post by archie on Aug 11, 2017 6:30:07 GMT
Good morning where can I see the administrators report please? On the website, see the 'Updates' tab on one of the tranches.
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Post by bracknellboy on Aug 11, 2017 7:39:26 GMT
From this example ISTM that BO's 5% does not rank behind us. I am not sure if BO's 5% is 5% of £900k or 5% of £2.6m. If it's the former then I would expect BO to get nothing and MT to get a share of 9/25.55 and if the latter then 9/24.7. Am I wrong? I think you are wrong, BPF 5% only apples to the MT loan and ranks behind A & B tranche capital. So BPF capital is the last 5% of the 900k referred to in this example. Agree with ilmoro: the statement is clear: BPF have a 5% FIRST LOSS holding in the MT loans. So in this structure, there is an amount recoverable for the purposes of the MT loans, which are equally ranked with other loans; if that sum fell short of full capital recovery, then BPF 5% goes first, then the tranche B loans and then the Tranche A. That is how I read it.
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archie
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Post by archie on Aug 11, 2017 7:54:09 GMT
I think you are wrong, BPF 5% only apples to the MT loan and ranks behind A & B tranche capital. So BPF capital is the last 5% of the 900k referred to in this example. Agree with ilmoro : the statement is clear: BPF have a 5% FIRST LOSS holding in the MT loans. So in this structure, there is an amount recoverable for the purposes of the MT loans, which are equally ranked with other loans; if that sum fell short of full capital recovery, then BPF 5% goes first, then the tranche B loans and then the Tranche A. That is how I read it. From the tranches note on these loans :- In all of these loans, BPF holds a first charge on the property which covers both tranche A and tranche B. However, in the event of a default, lenders in tranche A will be repaid their capital in full before lenders in tranche B receive any repayments. The full order of repayments, after recovery costs (LPA receiver fees etc.) have been paid, is: 1) tranche A capital 2) tranche B capital 3) BPF first loss investment capital 4) tranche A accrued interest 5) tranche B accrued interest 6) BPF first loss investment accrued interest
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spiral
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Post by spiral on Aug 11, 2017 9:03:26 GMT
4) tranche A accrued interest 5) tranche B accrued interest 6) BPF first loss investment accrued interest I remembered posting at the time (although I can't seem to find in in this thread so must have been another split risk tranche) that this split in my opinion is fundamentally wrong when default interest is applied as tranche A takes an even greater share of the pot at the expense of tranche B. What it should have stated was 4) tranche A accrued interest 5) tranche B accrued interest 6) tranche A+B default interest 7) BPF first loss investment accrued interest i.e. everyone gets their capital and standard interest before default interest is applied. e.g. If the loan was 1.5m with 1m at 10% ranking ahead of the 0.5m at 13% and it was defaulted for 12 months and recovered 1.68m the current share out would be: Both tranches receive their capital in full (1.5m) Tranche A would get 180K of interest @18% Tranche B would get 0. It should be: Both tranches receive their capital in full (1.5m) Tranche A would get 100K of interest @10% Tranche B would get 65K of interest @ 13%. Tranche A+B get a further distribution of 35K of default interest = 0.0233% Overall return is then 10.023% and 13.023% not 18% and 0%.
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SteveT
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Post by SteveT on Aug 11, 2017 9:19:59 GMT
I remembered posting at the time (although I can't seem to find in in this thread so must have been another split risk tranche) that this split in my opinion is fundamentally wrong when default interest is applied as tranche A takes an even greater share of the pot at the expense of tranche B. A reasonable point of view, and possibly a learning point for any future split-tranche MT loans, but the terms of this particular loan cannot be changed retrospectively. There's a reason why those holding tranche B have been receiving 13% and those holding tranche A only 10%. In the example you describe, those in tranche B should be delighted to get their capital back in full before tranche A holders receive a penny of accrued interest!
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