SteveT
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Post by SteveT on Oct 2, 2017 12:05:30 GMT
So the new tax statements are wrong and I won't be following them. It's obviously a matter of personal choice whether or not to follow the new tax statements but I disagree that they are "wrong", at least measured against HMRC's published SAIM guidance (whether or not HMRC interpreted the underlying legislation properly in producing SAIM 12000 is not something I'm qualified to say). The wording of section SAIM 12050 makes it clear that the commencement of " legal recovery procedures" may reasonably be considered by the platform as the trigger point for treating a P2P loan as "irrecoverable": When does a peer to peer loan become irrecoverable?
A peer to peer loan may be accepted as having become irrecoverable when there is no reasonable prospect of the recovery of the loan. When assessing recoverability, the funds available and potentially available to the borrower must be considered. A claim therefore cannot be established simply because the borrower has insufficient liquidity on the date the loan had been called in.
Whether a loan has become irrecoverable should be judged on a case by case basis, however as the loan will be managed by a platform, the platform would usually be in a position to determine when a loan has become irrecoverable. The platform would then inform the lender that the loan had become irrecoverable.
If the platform does not undertake this action, then the lender may still determine that the loan has become irrecoverable. However it will be the responsibility of the lender to show that there is no reasonable prospect of the recovery of the loan and it is NOT simply a case of late payment.
When is a peer to peer loan treated as irrecoverable?
Under the legislation for income tax relief for irrecoverable peer to peer loans in certain circumstances a loan may be treated as irrecoverable for the purposes of the relief even if there may be a prospect that the lender could recover some of the amount outstanding.
This is the case for the following situations:
Loans with security
When loans are made against security, a loan may be treated as becoming irrecoverable as if the security did not exist.
Loans where legal recovery action is taken
When the borrower has entered legal recovery procedures such as liquidation, administration, receivership or bankruptcy the loan may be treated as becoming irrecoverable as if such action was not available.
Subsequent Recoveries
If a loan has been treated as irrecoverable in either of the scenarios outlined above then the relief will be given at the point where the loan becomes irrecoverable other than for the specified recovery actions.
If any value is then recovered, either through these actions or by any other means, then this recovery would then be taxed as additional interest received by the lender.
This is the same treatment as any other subsequent recovery of a relieved irrecoverable loans (more detail in Subsequent recoveries).
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 2, 2017 12:45:05 GMT
So the new tax statements are wrong and I won't be following them. It's obviously a matter of personal choice whether or not to follow the new tax statements but I disagree that they are "wrong", at least measured against HMRC's published SAIM guidance (whether or not HMRC interpreted the underlying legislation properly in producing SAIM 12000 is not something I'm qualified to say). The wording of section SAIM 12050 makes it clear that the commencement of " legal recovery procedures" may reasonably be considered by the platform as the trigger point for treating a P2P loan as "irrecoverable": When does a peer to peer loan become irrecoverable?
A peer to peer loan may be accepted as having become irrecoverable when there is no reasonable prospect of the recovery of the loan. When assessing recoverability, the funds available and potentially available to the borrower must be considered. A claim therefore cannot be established simply because the borrower has insufficient liquidity on the date the loan had been called in.
Whether a loan has become irrecoverable should be judged on a case by case basis, however as the loan will be managed by a platform, the platform would usually be in a position to determine when a loan has become irrecoverable. The platform would then inform the lender that the loan had become irrecoverable.
If the platform does not undertake this action, then the lender may still determine that the loan has become irrecoverable. However it will be the responsibility of the lender to show that there is no reasonable prospect of the recovery of the loan and it is NOT simply a case of late payment.
When is a peer to peer loan treated as irrecoverable?
Under the legislation for income tax relief for irrecoverable peer to peer loans in certain circumstances a loan may be treated as irrecoverable for the purposes of the relief even if there may be a prospect that the lender could recover some of the amount outstanding.
This is the case for the following situations:
Loans with security
When loans are made against security, a loan may be treated as becoming irrecoverable as if the security did not exist.
Loans where legal recovery action is taken
When the borrower has entered legal recovery procedures such as liquidation, administration, receivership or bankruptcy the loan may be treated as becoming irrecoverable as if such action was not available.
Subsequent Recoveries
If a loan has been treated as irrecoverable in either of the scenarios outlined above then the relief will be given at the point where the loan becomes irrecoverable other than for the specified recovery actions.
If any value is then recovered, either through these actions or by any other means, then this recovery would then be taxed as additional interest received by the lender.
This is the same treatment as any other subsequent recovery of a relieved irrecoverable loans (more detail in Subsequent recoveries).The problem is that they havent followed that interpretation either. They have treated loans as irrecoverable from the point the loan expired and went into default not the point they began legal recovery proceedings & suspended the loan.
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pikestaff
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Post by pikestaff on Oct 2, 2017 14:21:37 GMT
So the new tax statements are wrong and I won't be following them. It's obviously a matter of personal choice whether or not to follow the new tax statements but I disagree that they are "wrong", at least measured against HMRC's published SAIM guidance (whether or not HMRC interpreted the underlying legislation properly in producing SAIM 12000 is not something I'm qualified to say). The wording of section SAIM 12050 makes it clear that the commencement of " legal recovery procedures" may reasonably be considered by the platform as the trigger point for treating a P2P loan as "irrecoverable": [...]
Loans where legal recovery action is taken
When the borrower has entered legal recovery procedures such as liquidation, administration, receivership or bankruptcy the loan may be treated as becoming irrecoverable as if such action was not available.
[...] I think the highlighted sentence is poorly drafted and it is not clear what HMRC intended it to mean. If it means what you think it means, the last few words are redundant. HMRC could just have said "When the borrower has entered legal recovery procedures such as liquidation, administration, receivership or bankruptcy the loan may be treated as becoming irrecoverable." Unfortunately I don't think this is consistent with the law, which defines irrecoverable (for this purpose) to mean "irrecoverable other than by legal proceedings or by the exercise of any right granted by way of security for the loan". I think this requires one to ask whether the loan would be irrecoverable if the legal proceedings (or security rights) were not available. The highlighted sentence is just about capable of being read so as to be consistent with the law, along the lines of "When the borrower has entered legal recovery procedures such as liquidation, administration, receivership or bankruptcy the loan may be treated as becoming irrecoverable if it would be so if such action was not available." Be that as it may, if it were ever to come to court I would expect the law to take precedence over mere guidance.
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littleoldlady
Member of DD Central
Running down all platforms due to age
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Post by littleoldlady on Oct 2, 2017 14:25:25 GMT
IMO the best way to avoid problems is to avoid attention. So I always submit the same figures as the platform. At the end of the day (well the end of the 2nd year) it does not affect the amount of tax paid.
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pikestaff
Member of DD Central
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Post by pikestaff on Oct 2, 2017 14:43:11 GMT
IMO the best way to avoid problems is to avoid attention. So I always submit the same figures as the platform. At the end of the day (well the end of the 2nd year) it does not affect the amount of tax paid. That's fine provided you are not in the position of being relieved at 20% in one year then taxed at 40% when the non-existent loss reverses.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 2, 2017 14:52:33 GMT
IMO the best way to avoid problems is to avoid attention. So I always submit the same figures as the platform. At the end of the day (well the end of the 2nd year) it does not affect the amount of tax paid. Except the figures are clearly wrong for #136, and probably others, if you sold out or bought on the SM after AC date. You would be claiming a relief for a loss you hadnt made or werent entitled to IMHO and that will affect the amount of tax paid.
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SteveT
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Post by SteveT on Oct 2, 2017 16:42:53 GMT
The problem is that they havent followed that interpretation either. They have treated loans as irrecoverable from the point the loan expired and went into default not the point they began legal recovery proceedings & suspended the loan. The dates look OK for the loans that appear on my statements (x2): #26, #45, #57, #86, #123, #172, #199, #204, #230 What date is shown for #136? I'm wondering if the issue is not so much the date chosen for "irrecoverable" but whether the system copes with any purchases made after that date and/or sales made before subsequent recovery (where older loans were still unsuspended despite early legal processes being underway)
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,329
Likes: 11,549
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Post by ilmoro on Oct 2, 2017 17:19:56 GMT
The problem is that they havent followed that interpretation either. They have treated loans as irrecoverable from the point the loan expired and went into default not the point they began legal recovery proceedings & suspended the loan. The dates look OK for the loans that appear on my statements (x2): #26, #45, #57, #86, #123, #172, #199, #204, #230 What date is shown for #136? I'm wondering if the issue is not so much the date chosen for "irrecoverable" but whether the system copes with any purchases made after that date and/or sales made before subsequent recovery (where older loans were still unsuspended despite early legal processes being underway) 20/4/15, legal recovery not started with LPA appointment until July 16 #123 is a completely arbitary date 29/3/16 ... demand was made for full repayment by 29/2/16 at which point it would have been in formal recovery, LPA appointed 17/5 ... so where does AC get their date from ... typo? #45 again seems arbitrary 30/11/16 ... demand made on 2/8, and again on 23/12 with LPA being appointed. AC date seems to be taken from a rejected extension date in the first vote. #86 makes sense 21/2/16 date demand letter issued so loan formally defaulted (though not yet in legal recovery as administrators not appointed until May) #57 7/4/15 Admin appointed 14/4/15 though notice of intention to appoint by a 3rd party was in place before that. Dont think any of the above were tradeable after the irrecoverable date except 136, and possibly 57 for a few days No logic to it I can see
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SteveT
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Post by SteveT on Oct 2, 2017 17:48:04 GMT
“OK” in my terms meant “there or thereabouts” 😉 In the right tax year at least! My assumption was that the precise date related to some correspondence or other. #136 does look odd by comparison.
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Post by chielamangus on Oct 3, 2017 8:20:57 GMT
Well, I had to go through about 17 different accounts to work out our income (two separate AC accounts) for the previous month - a lot of frustrating time to achieve what used to be done in a minute. Every other platform allows one to select one's own dates - why not AC?
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Post by ladolcevita on Oct 3, 2017 15:00:04 GMT
My tax statement as displayed today has different amounts compared to the one I printed off yesterday !? I am not really up on tax matters; is there a simple explanation for this ?
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jlend
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Post by jlend on Oct 3, 2017 15:29:55 GMT
My tax statement as displayed today has different amounts compared to the one I printed off yesterday !? I am not really up on tax matters; is there a simple explanation for this ? Mine is different as well... And I've just used the previous figure to submit my tax return.... stuartassetzcapital anything we need to know? Thanks
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jlend
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Post by jlend on Oct 3, 2017 16:07:17 GMT
My tax statement as displayed today has different amounts compared to the one I printed off yesterday !? I am not really up on tax matters; is there a simple explanation for this ? Mine is different as well... And I've just used the previous figure to submit my tax return.... stuartassetzcapital anything we need to know? Thanks I wonder if this has something to do with it? Current Statement Loans in Recoveries
New defaults in the current period 6th April 2015 to 5th April 2017 Yesterday Loans in Recoveries
New defaults in the current period 6th April 2016 to 5th April 2017
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dave2
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Post by dave2 on Oct 3, 2017 17:55:40 GMT
Looking at my online tax statement now, all figures messing about with default and recovery have been zeroised, and only the total interest income is shown. That's handy, it now corresponds to my tax return so I have printed a copy.  |
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kermie
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Post by kermie on Oct 3, 2017 19:45:45 GMT
I think jlend is correct - the defaults from 2015-2016 are now also included, which for me skews things considerably (to the point where my overall declarable interest is very negative). This includes (for me, anyway): Principal defaulted for loan WHP (39) Principal defaulted for loan Epping Bridging Loan - Extension(137) Principal defaulted for loan SCPMSL Loan Tranche 2(146) Principal defaulted for loan Kent Bridging Loan(84) Principal defaulted for loan WHS (172) If my overall declarable interest for AC for tax year 2016-2017 is negative, presumably I am allowed to offset that against other P2P income from other platforms? |
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