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Post by peregrine on Apr 8, 2019 15:16:41 GMT
I am invested in two defaulted loans - PBL 155 (the larged fortified house) where the property has been sold but insuffcient proceeds received to repay all capital and DFL005 (an arboreteum on the south coast) where there has been no recovery to date.
What are other investors doing about claiming tax relief on either of these loans (or indeed on any of the other troubled loans). Personally, I am particularly concerned about PBL155 as there is now no security for the outstanding loan as the property has been sold.
I am aware of HMRC guidance but feel nervous claiming relief if Lendy are unwilling to confirm that relief is properly due.
What are others going to do on their 2018/19 tax returns
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Post by picanto on Apr 8, 2019 15:30:03 GMT
Perhaps somebody more knowledgeable will be able to clarify but it is my understanding that there isn't any tax relief on these loans as Lendy haven't declared those loans as a loss.
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locutus
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Post by locutus on Apr 8, 2019 15:31:41 GMT
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sl75
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Post by sl75 on Apr 8, 2019 16:02:34 GMT
As always, I will use the figures supplied by each platform, as this seems to me the best way to ensure that the figures are consistent from one year to the next, to keep an easy paper trail of how I arrived at the figures, and to avoid accusations of tax fraud if (for example) I were to "forget" in a future year to declare a recovery of a loan I'd previously declared as a loss despite the platform not having done so. I'm sure there are some investors for whom this added administrative hassle and risk in order to declare a loss for tax purposes may be worth it, but I'm not one of them!
Note that Lendy has declared deductible losses on 2 loans now, but these losses were of an amount less than the interest already received on the loan (so it's just a fancy way of retrospectively treating the previously-received interest repayments as capital repayments)
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ilmoro
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Post by ilmoro on Apr 8, 2019 20:28:59 GMT
PBL155 was claimable last year, DFL005 isnt claimable - so I wouldnt be claiming either (unless you can get HMRC advice that you can claim in a year subsequent to the year a loan became 'treatable' as a loss - NB different to 4 year rollover allowed if insufficient income to offset losses)
As ever not advice etc
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mary
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Post by mary on Apr 9, 2019 6:49:12 GMT
PBL155 was claimable last year, DFL005 isnt claimable - so I wouldnt be claiming either (unless you can get HMRC advice that you can claim in a year subsequent to the year a loan became 'treatable' as a loss - NB different to 4 year rollover allowed if insufficient income to offset losses)
Except Lendy did not declare any losses on the tax statements for 2017/18, sticking to “claims underway”, which, at April 2018, could be seen as reasonable. Hence I did not claim any losses then. We are now 12 months further on, with zero information regarding any likelihood of actual further recoveries, it remains to be seen if Lendy now include it on the 2018/19 tax statements? I am obviously minded to claim the loss now, but if Lendy declare differently, I would certainly not wish to invite the Taxman to audit me!
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pom
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Post by pom on Apr 9, 2019 8:09:46 GMT
I'm not too bothered about rushing to claim losses, but the amount I have left in Lendy is such a relatively small amount, and just a fraction of my annual p2p interest so it shouldn't be a problem for me to apply it at any time in the short to medium term. I can see how for people with large amounts in stuck loans it could be a real worry tho.
What I'm wondering about is what happens when they do finally decide they're done - AIUI there have now been a couple of loans where its only been full recovery if you count the interest received over the life of the loan,but I don't know what if any documentation they will provide to support that, so if they do that with mine I'll still need to claim that as a loss whatever LY may say about how I had it back earlier - yeah maybe but I've paid 40% tax on it.
So it'll be interesting to see what they provide anything for those loans to support tax calculations...or whether they just expect people to work it out themselves. Not going to hold my breath....
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ilmoro
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Post by ilmoro on Apr 9, 2019 11:08:49 GMT
PBL155 was claimable last year, DFL005 isnt claimable - so I wouldnt be claiming either (unless you can get HMRC advice that you can claim in a year subsequent to the year a loan became 'treatable' as a loss - NB different to 4 year rollover allowed if insufficient income to offset losses)
Except Lendy did not declare any losses on the tax statements for 2017/18, sticking to “claims underway”, which, at April 2018, could be seen as reasonable. Hence I did not claim any losses then. We are now 12 months further on, with zero information regarding any likelihood of actual further recoveries, it remains to be seen if Lendy now include it on the 2018/19 tax statements? I am obviously minded to claim the loss now, but if Lendy declare differently, I would certainly not wish to invite the Taxman to audit me! Unlikely Lendy will include because they dont use the HMRC 'treatable' definition but wait until no further avenues for recovery are available. The discussion is therefore about lenders making their own determination under HMRC rules that a loss is claimable if it has entered legal recovery.
PBL155 met that criteria in 2017/18 with recievers appointed & asset sold. As I said it is not clear if you can defer making a claim under those criteria to a subsequent tax year. If not you would have to wait until Lendy declared the loan themselves.
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Post by Duane Dibley on Apr 9, 2019 20:22:19 GMT
The problem with not claiming relief on losses when they first become available is that you might not have sufficient interest in future years to offset them against.
Over the last couple of years I've been moving most of my P2P funds into ISA 'black box' accounts and will continue to do so over the forseeable future, so reducing my taxable P2P interest and and making any future declared tax relief unuseable.
Therefore until the rules are tightened and guidance more specific I'll be interpreting it in my best interest and claiming tax relief as and when it suits me, not when it suits the taxman and certainly not when it suits the likes of Lendy.
While I agree that it's always best to use the figures supplied by the platform, I haven't always done so, sometimes I've declared losses that the platforms haven't and sometimes I haven't when the platforms have, but as long as you keep records and can justify why you've taken a particular course of action I can't foresee a problem.
HMRC have bigger fish to fry and more obvious tax dodging to concentrate on rather than unraveling the intricacies of Lendy's P2P loan wreckage.
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Post by samford71 on Apr 9, 2019 21:30:34 GMT
My experience isn't specific to Lendy but might be useful.
For FY2015/16, my partner claimed losses as prescribed under the guidance given (see link). This caused our interest to be reduced by a four figure amount vs. the tax numbers sent by the platforms to the HMRC. The tax certificates generated by the platforms didn't have to include losses that year, and most did not. The HMRC flagged this and asked for an explanation which we provided and the HMRC signed this off with no issues.
For FY2016/17, my initial thought was to simply submit to HMRC whatever we received from the platforms, trued up for anything from FY2015/16. This was the path of least resistance. The issue was that many platforms did not follow the same guidance as published in the link above. In particular one platform (TC) seemed to be significantly under-reporting losses. While our submission would be consistent with the platforms, our submission woud be internally inconsistent across the platforms we used. Moreover, given that it was clear that we were reducing our P2P exposure, it was possible that by underclaiming in 2016/17, we would not have enough interest in later years to claim against. As a result, we submitted losses again based upon our interpretation of the the guidance, which again resulted in a four figure income mismatch with the platforms. The HMRC again flagged this and we again explained the difference which they signed off with no further issues.
For FY2017/18, we followed our approach again and completely ignored some P2P platforms tax certificates (including TC and Lendy). This time we've had no compliance check from HMRC despite another four figure mismatch with the tax certificates.
On all occasions, the HMRC has been very understanding of our dilemma. The key from their perspective is that our approach is consistent from year to year and that we report any recoveries that are from loans where we claimed losses in prior years.
If it's easier simply state the numbers as provided by the platforms, but don't be too worried about pushing back against platforms such as Lendy that clearly understate losses. I don't think the HMRC will have any issues.
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sl75
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Post by sl75 on Apr 10, 2019 9:01:02 GMT
The problem with not claiming relief on losses when they first become available is that you might not have sufficient interest in future years to offset them against. ... and you (that's "generic you" rather than you specifically) might have a higher marginal tax rate in future tax years so that claiming "early" actually works against your own long-term financial self-interest, due to being taxed at a higher rate on the recoveries than the rate at which relief is now being claimed.
I'm sure there are people who already consider it worth ignoring the "tax statement" produced by the platform and producing their own from scratch... but for anyone else, that's the extra administrative burden you'd be imposing on yourself (potentially for all future tax years) by doing anything different from the platform, as you'll have to declare as income any capital payments made on loans you'd chosen to consider eligible for loss relief, and to avoid claiming for the same loan(s) again if/when the platform finally admits that a loss has occurred!
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