pikestaff
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Post by pikestaff on Dec 12, 2014 18:32:35 GMT
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mikeb
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Post by mikeb on Dec 12, 2014 18:36:25 GMT
Take the number of lenders on this loan, bear in mind that the Shrapnelator[tm] will spread it over more customers in time, and then multiply by the cost of a stamp, envelope and piece of paper.
Because C** are going to have to produce a lot of very fiddly little tax certificates, as they are the ones withholding the tax. Costing them to administer? I suppose it will!
It's great that AC are going to amass these tax-deductions and display them on the site [already there in the Tax Report], but isn't the obligation on C** to send us certificates?
How well C** know all our addresses, holdings etc.?
HMRC definitely need to rethink this stuff, given that P2P is getting bigger every day ...
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oldgrumpy
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Post by oldgrumpy on Dec 12, 2014 18:43:06 GMT
I had never even given it a thought until today, having assumed that eventually it would be AC, RS, FK, FC etc who would be retaining the tax yearly and passing it on to HMRC. The current situation looks like it could be very messy for any company which opts to deal this way. Very rapid clarification from the chancellor would seem to be required.
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pikestaff
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Post by pikestaff on Dec 12, 2014 18:49:15 GMT
...Things could get 'messy' with HMRC if you need to reclaim. Potentially yes. Since we are the lenders, any company adopting this view has an obligation to send each lender an annual tax certificate showing the interest paid by it and the tax deducted. The company does not have this information. AC might, if its systems allow it to track cumulative interest paid to individual lenders on a given loan. However, there is no reason why they should. And as for the GEIA, the mind boggles. What a mess. Edit: Crossed with mikeb's post which shows that AC will have the information.
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bugs4me
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Post by bugs4me on Dec 12, 2014 18:57:11 GMT
I had never even given it a thought until today, having assumed that eventually it would be AC, RS, FK, FC etc who would be retaining the tax yearly and passing it on to HMRC. The current situation looks like it could be very messy for any company which opts to deal this way. Very rapid clarification from the chancellor would seem to be required. Well grumps you're not going to get any clarification this side of May 2015 and certainly not from any Chancellor. What it will trigger will be an automatic Q on the Q&A's section as folks that fall below the threshold will avoid these like the plague I would have thought. Looks as though this is beyond the control of AC but the fact it's caught everyone by surprise and this company seem to be the only ones applying it - yes I am still cynical. Also, if they (or anyone else for that matter), repays the loan within 12 months, I assume they have to refund the tax deducted. What a mess!!! It may also impact upon the fledgling GEIA which I assume is more for the passive lender who many will or may fall below that threshold. OOI pikestaff - do you have to complete just one form or is it one form per company that deducts tax at source?
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Post by chris on Dec 12, 2014 18:57:45 GMT
...Things could get 'messy' with HMRC if you need to reclaim. Potentially yes. Since we are the lenders, any company adopting this view has an obligation to send each lender an annual tax certificate showing the interest paid by it and the tax deducted. The company does not have this information. AC might, if its systems allow it to track cumulative interest paid to individual lenders on a given loan. However, there is no reason why they should. And as for the GEIA, the mind boggles. What a mess. Edit: Crossed with mikeb's post which shows that AC will have the information. As of today our system supports different tax rates per lender and interest to be retained by the borrower or by the platform on a per loan basis, with the tax totals being tracked on site and included on your tax statements. We can even break it down per investment account. It's there if needed but this is one feature that I hope is seriously under utilised.
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pikestaff
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Post by pikestaff on Dec 12, 2014 18:59:59 GMT
Does the Data Protection Act not protect me from this borrower being told my personal details such as name, address and holdings?
Probably not. I think there are exclusions to deal with the collection of tax. Having said that, it may be possible for the company to arrange for AC to produce the tax certificates on its behalf. If there's no climb-down I bet this is what will happen in the end.
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kermie
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Post by kermie on Dec 12, 2014 19:00:31 GMT
Does the Data Protection Act not protect me from this borrower being told my personal details such as name, address and holdings?
Good question; and vice-versa for those loans where the borrower wants to remain anonymous - I can't see how they can remain anonymous and also supply a tax certificate ;-) Edit:cross-post with pikestaff - yes, I guess AC could be the conduit and redact details of the tax certificate. All adds to unfortunate costs for AC (and lenders and borrowers in turn, of course). What a faff, but I can understand the Chancellor's aim to reduce tax evasion from a minority of unscrupulous lenders.
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bigfoot12
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Post by bigfoot12 on Dec 12, 2014 19:02:47 GMT
Anyone fancy doing a few sums to work out what impact this will have on the borrowers, say lost interest per annum per £1k invested in loans that withold tax. . Quick check using XIRR on libreoffice, I'm not a tax expert/account/lawyer,... blah blah, not giving advice, and am probably wrong, but here goes:- Assume worst case, a 1 year loan draws down with no delays on 8th March, pays monthly on time and repays on time. Assume 9.5% gives an IRR of 9.92% (due to monthly compounding) with no withholding and no tax. For a 20% taxpayer paying tax on 25th Jan year later (no point leaving it to the very last day), and assuming that they don't make you make payments on account, this is a net IRR of 8.07%. If there is withholding from the borrower this falls to 7.87%. So a 0.2% loss (I think). I haven't considered the impact of tax on the extra interest earned, which I need to; I need to think about it a bit more.
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pikestaff
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Post by pikestaff on Dec 12, 2014 19:04:29 GMT
...OOI pikestaff - do you have to complete just one form or is it one form per company that deducts tax at source? The R40 is one form for the tax year, not one form per company.
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Post by andrewholgate on Dec 12, 2014 19:08:20 GMT
Does the Data Protection Act not protect me from this borrower being told my personal details such as name, address and holdings?
The borrower is only being told how much to withhold not all your details
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Post by andrewholgate on Dec 12, 2014 19:17:48 GMT
Please note, AC have made a statement on the website. I will not be discussing this further on here until I have a clearer picture from HMRC. I will say, the borrower is correct as to how the tax law is worded currently. We cannot force the borrower to pay gross.
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bugs4me
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Post by bugs4me on Dec 12, 2014 19:25:17 GMT
I'm not totally familiar with this loan but a quick look (on the internet) seems to imply that withholding tax by ordinary UK registered companies (not Banks/BS) applies where the interest is paid annually. Where it is paid monthly then it is not a requirement for the company to apply withholding tax legislation. The loan term has nothing to do with it. That's how I'm reading things but not being a tax expert in any shape or form etc, etc.
Maybe I'm just barking up the wrong tree so certainly stand to be corrected.
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Post by andrewholgate on Dec 12, 2014 19:32:08 GMT
Wrong interpretation. Annual interest means where the loan is committed for 365 days or greater. As this is longer than 1 year the position to withhold is correct.
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Post by bracknellboy on Dec 12, 2014 19:33:06 GMT
Does the Data Protection Act not protect me from this borrower being told my personal details such as name, address and holdings?
The borrower is only being told how much to withhold not all your details Interesting. I may not have done my due dil on AC as well as I thought I had. Are their loan contracts between individual lender and borrower or not ? If there are, I would have thought they had a right to those details (not that under normal circumstances they would want 'em).
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