£3.4m WInd Turbine Portfolio Loan

I've taken a look at the newly revised Tax Statement and have a couple of problems...

• Most importantly, the information provided is not consistent with the information required by the SA tax return form.  That form does not ask for total interest earned and total tax retained, so there is no place to enter the numbers now being provided.  The form asks that the amounts of taxed and untaxed interest earned be entered separately.  It presumes that any 'taxed' interest has had 20% tax retained, and that any untaxed interest has had no tax retained.  While I accept that I could take the number shown as tax retained and multiply it by five to produce a number to report as my taxed interest earned, and then subtract that from my total interest earned to produce a number to report as my untaxed interest earned, I really don't think I -- or my accountant -- should be required to make those calculations.  And I can pretty well guarantee that a goodly number of AC's lenders will not understand the situation well enough to produce the correct numbers to report to HMRC.  I therefore would urge AC to revise the Tax Statement to divide a lender's interest into the taxed and untaxed portions and therefore provide numbers that can be given to HMRC without having to be massaged first.
• I note that the amount of tax retained is described as "The amount of tax we’ve retained and paid to HMRC for this period."  AIUI, it was the borrower that retained the tax and paid it to HMRC, so that statement is not correct.  When completing a SA return, the taxpayer generally has to supply only the total amounts to report, but they have to keep records of the payers of all the individual items that go into those totals, and HMRC can ask for those details if they wish to do so.  I presume that's so that they can cross-check to see that those who have retained tax have actually paid that money across to HMRC.  I therefore believe that I need to have from AC an itemised list of the borrowers who have retained tax rather than just a total reported as being retained by AC.  To be honest, I'd think that AC's tax advisers/ accountants really wouldn't want lenders to be telling HMRC that AC had retained tax and paid it across to HMRC if that's not really the case.  I can imagine HMRC coming to AC and asking to see evidence of all that tax retained having been forwarded to HMRC and that could put AC into a rather awkward position.
  

I suspect these are items that chris needs to take up with the Admin people who specify what info they need the website to supply to lenders.

mikes1531 - It looks like it could be a mess but fortunately at this stage only this company has decided it needs to withhold interest. All of the upcoming loans show repayments being made gross so whilst I take on board what andrewholgate mentioned earlier - something about having clever accountants or words to that effect, the cynical side of me tells me something else. What I find more annoying is that this will impact returns more than just the 20%. Tax due on earnings for the year 14-15 are not due until my accountant submits my return in early 2016. So if I invested in this particular loan or any other that decided to withhold tax, I do not have the use of that money for other investments.

One thing is certain, borrowers that do withhold tax will find their proposals less attractive to lenders/investors that do not.

I have no idea how often this particular borrower is required to actually pay the withholding tax. Is it annual, quarterly or what have you. One thing is certain is that it will not be on the same day that they withhold it. Point of principle on my part - yes it is. I just hope that companies that currently pay gross that I have investments in do not suddenly change the 'rules' and decide to pay net as that is their apparent right to do so.

They have to pay it as soon as they withhold it. 

andrewholgate - okay, I stand corrected. Balmy tax system needs to go on a bonfire somewhere!

yeah, must be a nightmare.  Just when things were quietening down too. Good luck.

We're discussing the best way of making sure that new lenders and those that aren't on the forum do not buy into the loan without knowing.  We'll keep things as they are over the weekend and decide internally on where the warning should sit on the page, what it should say, etc.  We'll also be keeping the loan out of the GEIA or the time being due to the complications of the tax treatment and the provision fund.

Just for info chris, having looked at my personal and business accounts your fast implemented net/gross taxation split appears to be working correctly.

Impressed with the way this is being handled.