IFISAcava
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Post by IFISAcava on Sept 11, 2017 15:13:43 GMT
Illegal? The position on this is unclear as there is no specific prohibition with the HMRC guidelines in relation to P2P lending merely interpretations of clauses relating to providers transfering S&S holdings. It is clear that several platforms have the opinion as the result of discussions with HMRC/legal that the transfer via an open market SM is not prohibited. Suppose someone with a bot (to make sure nobody else muscles in) sells his loans very cheaply then buys them into his ISA thus exceeding his £20k limit (based on real cost) then claims a capital loss on his non-ISA account to offset against other interest earned. Surely this is sufficiently improper to be illegal. it's a loophole, which may or may not need to be closed. And even with a bot there is the possibility that somemone else had a faster bot and you may lose out. Also, what about someone who artificially does a B&B on their shares to make a loss to offset against gains elsewhere, despite not actually having made a loss?
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IFISAcava
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Post by IFISAcava on Sept 11, 2017 15:27:05 GMT
Suppose someone with a bot (to make sure nobody else muscles in) sells his loans very cheaply then buys them into his ISA thus exceeding his £20k limit (based on real cost) then claims a capital loss on his non-ISA account to offset against other interest earned. Surely this is sufficiently improper to be illegal. What loss? You cant claim a capital loss as no loss has been incurred. Selling cheap isnt a loss. on FS you convert it to capital so could be a loss if you sell early (1% discount is the limit) Also on ABL rate you can sell at a big discount thus making (as I understand it) a big capital loss on the non-ISA account.
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IFISAcava
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Post by IFISAcava on Sept 11, 2017 15:29:35 GMT
Suppose someone with a bot (to make sure nobody else muscles in) sells his loans very cheaply then buys them into his ISA thus exceeding his £20k limit (based on real cost) then claims a capital loss on his non-ISA account to offset against other interest earned. Surely this is sufficiently improper to be illegal. I wouldn't have thought so. In fact if this was a common occurence then I would imagine others would write their own faster bots to try and profit from situations such as this - the market will win in the end. In response to a previoius comment by robski regarding selling at below the market rate....this isn't possible. By definition the price you sell at is the market rate....that's how markets work. Again, if people are trying to put trades through that aren't reflective of where the actual market is then the market will catch them out pretty quickly. This aside, I don't think it's illegal to buy your own parts as long as they are being traded on an open market so there is no need to worry. Even if it was an issue I see no threat to the platforms (FS and ABL certainly dont think so and AC allow discounting and will soon have an ISA). The platforms can easily warn people off or reverse trades they have made with themselves if it ever became an issue. In fact to put peoples minds at rest and as an act of service to the forum, I am happy to pledge that if MT ever allow discounting and people are trying to do this I will write a bot that scours the market for low offers and hoovers them up pronto. All sorted I think a repeated trade back and forth between accounts (which theoretically could eventually get loads more into your flexible ISA through repeated discounting) might be seen as an issue and "trading"
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ilmoro
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Post by ilmoro on Sept 11, 2017 16:04:41 GMT
What loss? You cant claim a capital loss as no loss has been incurred. Selling cheap isnt a loss. on FS you convert it to capital so could be a loss if you sell early (1% discount is the limit) Also on ABL rate you can sell at a big discount thus making (as I understand it) a big capital loss on the non-ISA account. But not claimable under P2P loss relief rules as it wouldnt fulfill criteria Not sure in the case of CGT or company lending but Id be surprised if you could self inflict a loss and claim.
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IFISAcava
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Post by IFISAcava on Sept 11, 2017 16:06:57 GMT
on FS you convert it to capital so could be a loss if you sell early (1% discount is the limit) Also on ABL rate you can sell at a big discount thus making (as I understand it) a big capital loss on the non-ISA account. But not claimable under P2P loss relief rules as it wouldnt fulfill criteria Not sure in the case of CGT or company lending but Id be surprised if you could self inflict a loss and claim. you can't claim against P2P interest, no. But you could claim against capital gains. bed and breakfasting is arguably self inflicted and claimable.
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ilmoro
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Post by ilmoro on Sept 11, 2017 16:17:43 GMT
But not claimable under P2P loss relief rules as it wouldnt fulfill criteria Not sure in the case of CGT or company lending but Id be surprised if you could self inflict a loss and claim. you can't claim against P2P interest, no. But you could claim against capital gains. bed and breakfasting is arguably self inflicted and claimable. Would be prevented by the 30 day rule AIUI, if you sell a share and then buy it back within 30 days you are treated as never having sold them. I would suspect the same rules would apply for P2P loans if HMRC so desired.
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robski
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Post by robski on Sept 11, 2017 16:22:43 GMT
Suppose someone with a bot (to make sure nobody else muscles in) sells his loans very cheaply then buys them into his ISA thus exceeding his £20k limit (based on real cost) then claims a capital loss on his non-ISA account to offset against other interest earned. Surely this is sufficiently improper to be illegal. I wouldn't have thought so. In fact if this was a common occurence then I would imagine others would write their own faster bots to try and profit from situations such as this - the market will win in the end. In response to a previoius comment by robski regarding selling at below the market rate....this isn't possible. By definition the price you sell at is the market rate....that's how markets work. Again, if people are trying to put trades through that aren't reflective of where the actual market is then the market will catch them out pretty quickly. This aside, I don't think it's illegal to buy your own parts as long as they are being traded on an open market so there is no need to worry. Even if it was an issue I see no threat to the platforms (FS and ABL certainly dont think so and AC allow discounting and will soon have an ISA). The platforms can easily warn people off or reverse trades they have made with themselves if it ever became an issue. In fact to put peoples minds at rest and as an act of service to the forum, I am happy to pledge that if MT ever allow discounting and people are trying to do this I will write a bot that scours the market for low offers and hoovers them up pronto. All sorted I wouldn't make a bot personally since its against the T&Cs I think you are getting confused on the below market trading thing. I hold £30k in bollington (for example). I decide to transfer that to my ISA, I discount it to £20k (having already funded my ISA with £20k), I switch/log whatever to my ISA account and buy the £20k. I have transfered at a reduced price. Yes the market price could be only 66.67% of the original value at that point, then its easy, timing will be simple, however lets say the market price is 97%, I will have transfered at a reduced price compared to the market. Technically there is a risk someone else will snap it up, but if doing such "dubious" things you would obviously pick a time when you thought you were least likely to have your transfer sniped, like say 3.30am on Monday morning. Who is to say what the market price is. The seller? Any other seller? An unrelated seller?
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bg
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Post by bg on Sept 11, 2017 16:30:50 GMT
I wouldn't have thought so. In fact if this was a common occurence then I would imagine others would write their own faster bots to try and profit from situations such as this - the market will win in the end. In response to a previoius comment by robski regarding selling at below the market rate....this isn't possible. By definition the price you sell at is the market rate....that's how markets work. Again, if people are trying to put trades through that aren't reflective of where the actual market is then the market will catch them out pretty quickly. This aside, I don't think it's illegal to buy your own parts as long as they are being traded on an open market so there is no need to worry. Even if it was an issue I see no threat to the platforms (FS and ABL certainly dont think so and AC allow discounting and will soon have an ISA). The platforms can easily warn people off or reverse trades they have made with themselves if it ever became an issue. In fact to put peoples minds at rest and as an act of service to the forum, I am happy to pledge that if MT ever allow discounting and people are trying to do this I will write a bot that scours the market for low offers and hoovers them up pronto. All sorted I wouldn't make a bot personally since its against the T&Cs I think you are getting confused on the below market trading thing. I hold £30k in bollington (for example). I decide to transfer that to my ISA, I discount it to £20k (having already funded my ISA with £20k), I switch/log whatever to my ISA account and buy the £20k. I have transfered at a reduced price. Yes the market price could be only 66.67% of the original value at that point, then its easy, timing will be simple, however lets say the market price is 97%, I will have transfered at a reduced price compared to the market. Technically there is a risk someone else will snap it up, but if doing such "dubious" things you would obviously pick a time when you thought you were least likely to have your transfer sniped, like say 3.30am on Monday morning. Who is to say what the market price is. The seller? Any other seller? An unrelated seller? The market price is where the market trades. If you want to risk discounting a loan by £10k (this is money you will lose if someone else buys it) then it's your call. If that price is outside 'the market' then someone will buy it for sure....it's a very risky game to play. If you are saying it's hard to determine where the market is then who is to say that 66.67% is the wrong price? My point is that in a market, if someone posts what is obviously a wrong price then there will be a queue of other market participants lined up to trade it - so it's a very risky strategy if you think you can beat all other users to trade your own loan part. I see little difference between having a dealing, ISA and SIPP account on any of the many share platforms (as I and hundreds of thousands of others do). I can sell from one account and buy at the same time from the other and maybe I'll buy my own shares (or maybe someone else will snaffle them). Of course I can also do a bed & ISA or bed & SIPP as long as that is at the current market level.
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yangmills
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Post by yangmills on Sept 12, 2017 8:57:23 GMT
Focussing on whether this is a 'market price' is a distraction since these are illiquid loans. For FCA regulated entities the issue is whether this is considered to be a 'improper transaction' under Market Abuse Regs. Any transaction that could be considered to be concealing a profit, loss or cashflow can be considered improper under MAR 3.5.13.
For FCA regulated platforms to essentially facilitate a transaction that could be considered simply window dressing to allow an investor to avoid/create a tax liability would be dangerous ground.
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r00lish67
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Post by r00lish67 on Oct 22, 2017 11:50:39 GMT
So, we're a month further down the line. As the poll is still open, I'd be interested to know whether any investors have changed their views on whether MT allowing discounting is 'a good thing' . If you so wish you can change your vote by unticking one option and ticking another. As it stands, it's 28.73% for, 67.4% against, and 3.87% undecided/don't care. A revised case for it being 'a good thing', in light of feedback in the thread: 1) Some investors said "why change what's working now?" .Well, as of today, there are large SM queues in Hall, Plymouth, and Prestbury which are all selling slowly, leaving investors potentially locked in for long periods (or forever). Investors in these loans wishing to sell currently have no option but to wait and hope. I'd argue that a large number of Prestbury investors sitting in the £413k queue might be interested in having an opportunity to sell. 2) Similarly, investors in the current Newcastle loan will almost certainly be locked in upon drawdown due to its size and the CB offer incentivising flippers. 3) There were some investors who felt that other investors should be prepared to hold to term. I would argue that this change would not make a jot of difference to those with this view as they can continue to buy and hold for as long as they like. There is at least 1/3 of investors on this forum (at the time of writing) who feel differently - why punish them? 4) A reminder that what is being proposed is discounting only, not premiums. There would be therefore no scope for 'greedy traders' buying all of a good loan and selling it a premium and a very limited scope for anyone deciding to buy at a discount in the hope of selling it later closer to par (although technically possible, in practice this would be quite rare). 5) With the forthcoming MT ISA, any investors wishing to transfer their holdings into the ISA wrapper will be unable to do so efficiently for any loans with SM queues (unless MT offer some sort of facilitation, which hasn't been done anywhere else and which would not be in their best interests anyway - they'd prefer investors to invest in new loans). 6) Probably the most frequently voiced concern expressed against is it making the platform complicated. In terms of implementation, I would propose 1 new drop-down box in the selling screen set to 0% by default. If investors choose to sell at discount, they could select in 0.1% increments up to -1.0% (i.e. -0.1%/-0.2%/-0.3%). The sale price for the loan part would then be displayed. This would limit any potential for 'fat finger' mistakes, and limit any potentially poor decisions on the part of investors accidentally or on purpose selling at crazy discounts. It would also limit the benefit of anyone trying to 'spook the market' and benefiting from big discounts. 7) Related to the previous point, the implementation of a 1% discount cap would largely restrict any significant benefits for people abusing P2P ISA's. Edit: I appreciate that peoples views on this seem about as entrenched as views on Brexit, but I'll have a go anyway
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archie
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Post by archie on Oct 22, 2017 12:00:46 GMT
Still 'No'. I would reduce my investment here if it is implemented. I'd invest less in any new loans. 3 months notice of any change would be appreciated. Newer tranches of loans won't sell if there are discounted earlier parts already on the sm. No benefit to platform in my opinion. I've sold everything I wanted to include some MH.
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r00lish67
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Post by r00lish67 on Oct 22, 2017 12:13:50 GMT
Still 'No'. I would reduce my investment here if it is implemented. I'd invest less in any new loans. 3 months notice of any change would be appreciated. Newer tranches of loans won't sell if there are discounted earlier parts already on the sm. No benefit to platform in my opinion. I've sold everything I wanted to include some MH. Re: new tranches of loans, it's a good point, and one certainly relevant with the Bradford loan's structure. There might be a better idea, but my initial suggestion would be to suspend discounted SM sales for the affected loan when a new tranche is issued until it is filled. This would effectively present the new tranche in the same way as now, and you could still potentially sell the old tranches as you can when this happens currently. re: MH, glad you've managed to sell, but I hope you'd agree this may not always be possible? Just because you've been fortunate, that's not to say others will be. Why do yourself out of the opportunity of selling if you really want to?
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archie
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Post by archie on Oct 22, 2017 12:21:04 GMT
Still 'No'. I would reduce my investment here if it is implemented. I'd invest less in any new loans. 3 months notice of any change would be appreciated. Newer tranches of loans won't sell if there are discounted earlier parts already on the sm. No benefit to platform in my opinion. I've sold everything I wanted to include some MH. Re: new tranches of loans, it's a good point, and one certainly relevant with the Bradford loan's structure. There might be a better idea, but my initial suggestion would be to suspend discounted SM sales for the affected loan when a new tranche is issued until it is filled. This would effectively present the new tranche in the same way as now, and you could still potentially sell the old tranches as you can when this happens currently. re: MH, glad you've managed to sell, but I hope you'd agree this may not always be possible? Just because you've been fortunate, that's not to say others will be. Why do yourself out of the opportunity of selling if you really want to? There is no guarantee anyone can sell anything. I only sold a small amount of MH to reduce it to less than 10% of my MT total. I still hold a lot. It wouldn't have mattered if I hadn't sold. If there was discounting it would be impossible to sell a loan close to term without offering a discount. Everyone will try and queue jump in front of everyone else. It doesn't make it easier. I've also sold loads on Lendy which operates a similar market.
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r00lish67
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Post by r00lish67 on Oct 22, 2017 12:46:51 GMT
<snip> If there was discounting it would be impossible to sell a loan close to term without offering a discount. Everyone will try and queue jump in front of everyone else. It doesn't make it easier. For anyone wanting to sell the large loans I mentioned previously, they simply cannot at all currently. How is that better than having to offer a discount? Re: not making it easier - given the significant difficulty I would have in selling, for example, some of Prestbury right now, I have to disagree. I could offer it at a small discount, and quite possibly have my money back in my bank account today. Easier. Re: queue jumping, yes people will increase discounts until demand meets supply, that's what's being proposed. on FS, this currently tops out at about -0.7% across all loans before buyers are found. Given the intricacies of FS's SM, MT's may well not even go as high that. I prefer that to not being able to sell at all personally. Re: selling on Lendy, again I'm glad you've been fortunate. Have you tried selling some of the cement related loan behind £200k of others recently?
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archie
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Post by archie on Oct 22, 2017 12:55:33 GMT
<snip> If there was discounting it would be impossible to sell a loan close to term without offering a discount. Everyone will try and queue jump in front of everyone else. It doesn't make it easier. For anyone wanting to sell the large loans I mentioned previously, they simply cannot at all currently. How is that better than having to offer a discount? Re: not making it easier - given the significant difficulty I would have in selling, for example, some of Prestbury right now, I have to disagree. I could offer it at a small discount, and quite possibly have my money back in my bank account today. Easier. Re: queue jumping, yes people will increase discounts until demand meets supply, that's what's being proposed. on FS, this currently tops out at about -0.7% across all loans before buyers are found. Given the intricacies of FS's SM, MT's may well not even go as high that. I prefer that to not being able to sell at all personally. Re: selling on Lendy, again I'm glad you've been fortunate. Have you tried selling some of the cement related loan behind £200k of others recently? Re: not making it easier - you queue jumping might make it easier for you but the person currently at the front of the queue loses. How is it easier for them when they are being pushed back down the queue? I've sold out on Lendy (some were more than £200k down the queue when listed) and only have a few loans left on FS.
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