Tax relief on P2P losses

AIUI, your p2p losses & interest (outside ISA-wrappings) are treated as a black box relative to other income sources. You can only offset non-ISA p2p loss against non-ISA p2p interest, not against any other forms of interest or income whatsoever. You must do this to the maximum extent of non-ISA p2p interest earned in the earliest year possible, and can carry that loss offset to subsequent years if (and only if) your non-ISA p2p interest earned does not exceed your non-ISA p2p loss as yet not offset.

Example:

A) Tax Y1: p2p loss = 10K GBP; p2p interest earned = 10K GBP --> all loss must be declared in Y1

B) Tax Y1: p2p loss = 10K GBP; p2p interest earned = 6K --> 6K GBP loss must be declared in Y1; 4K loss to be carried over to Y2 and must be declared fully in Y2 unless p2p interest earned < 4K in which loss must be claimed equal to interest earned then excess may be carried to Y3 etc.

Whether you can do what you want is somewhat incidental....depends purely whether the above rule is met or not.

Of course, the definition of an "irrecoverable" p2p loan is not an exact science, and if you are happy to chat with HMRC regarding any discrepancies you might file regarding the tax year when a loan becomes "irrevocable" versus a platform's interpretation (which is filed automatically with HMRC) then you may have some flexibility in when you file your loss versus p2p income earned, so long as the above rule is complied with. 



That's my understanding of what you've posted in the context of p2p tax treatment in the UK. Any corrections very welcome!

For some loans that a platform has decided are 'irrecoverable' (following HMRC's effective guidance that as soon as a loan is in default then it CAN be declared 'irrecoverable').
I have decided that it was not yet 'irrecoverable' and therefore delayed using that loan that tax year.
Some of these loans have paid up in subsequent tax years, so my decision (in hindsight) was right.

AIUI a loan you hold must be treated as one unit, so you can't split your 'irrecoverable' decision within a loan, but you can of course make a different decision about another loan.

I keep careful records of when a platform declares 'irrecoverable' and when and why I decide it is 'irrecoverable' along with records of when losses and recoveries are used in a tax return.

I can't think of a circumstance where I can legitimately claim a loan as 'irrecoverable' earlier than a platform might make the same decision.

Good question! I don’t know

If a platform dies the administration of loans made through the platform will be taken over by a third party (as required by the FCA).  There will be no immediate tax consequences.  However, the third party administrator may deduct charges, which may not be tax deductible (see past discussions of platform charges). 

In principle, relief for any losses on the loans should be given on the same basis as for any other p2p loans.  However, there's no guarantee that the administrator's interpretation of the loss relief rules will be the same as the platform's.