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Post by andrewholgate on Nov 27, 2014 17:03:37 GMT
First of all, Assetz Capital is not contractually bound to participate in this forum but has done so as we seek to promote openness and transparency in financial services. We continue to maintain a presence and make comments on the forum, indeed I believe I'm the only MD of one of the major platforms that appears on here regularly and also gives you director access to me via email at andrew@assetzcapital.co.uk I want to continue that. While I do promote free speech, I do feel some comment are perilously close to abusive/rude. I'm a big boy and can take negative feedback (and have done before to make improvements to what we do) but let's keep things civil. There are a lot of people expressing opinions on how the business should be run, but alas I'm not ready to resign so those people will just have to wait and then go through the interview process with the Board. Joking aside: You should not expect Assetz Capital to be able to answer every thread on this forum. We will do our best to remain interactive with the forum though, including me being on here. A number of short term loans didn't repay on time. What I can say is that ability to repay is not in doubt as we hold substantial security against these loans. Your capital is not at risk of loss and satisfactory outcomes on these loans are predicted. If there has been a mistake, it is perhaps that we didn't renew terms sooner. But I repeat there is no risk of loss. One change we made was a change log where updates and responses to common questions are logged in one place. This makes it easier than responding to 5 different threads all quoting the same thing. This is currently found here on the forum but will move to the AC site in due course. If you have a query, check here first: Change LogGEIA. Questions have been asked over the tax treatment of the income. ASSETZ CAPITAL DO NOT OFFER TAX ADVICE AND ARE NOT SPECIALISTS IN THIS AREA. YOUR TAX LIABILITY IS FOR YOU TO DISCUSS WITH HMRC AND/OR A SPECIALIST TAX ADVISER. AC offers fixed rate returns with no fees and the GEIA is no different in that regard. The figure quoted is what you get subject to any losses. The only difference between being offered a loan at a higher rate and the GEIA is the provision fund. This is not a fee but AC is setting aside potential profits into the fund to try to ensure you get the 7% and to minimise the losses (to nil if everything goes as planned). However, you should take independent tax advice.I would like to finish by saying to date no investor has lost a penny using AC and average returns for lenders are above 11% across the portfolio. Whilst there are some frustrations for you in rounding errors, nobody responding within 30 seconds of your query or a loan not repaying on an exact date, the safety of your money in AC remains. We are the only platform with a deep understanding of lending across multiple sectors and the only Board that has 5 ex-lenders in situ.
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Post by pepperpot on Nov 27, 2014 17:42:08 GMT
GEIA. Questions have been asked over the tax treatment of the income. ASSETZ CAPITAL DO NOT OFFER TAX ADVICE AND ARE NOT SPECIALISTS IN THIS AREA. YOUR TAX LIABILITY IS FOR YOU TO DISCUSS WITH HMRC AND/OR A SPECIALIST TAX ADVISER. AC offers fixed rate returns with no fees and the GEIA is no different in that regard. The figure quoted is what you get subject to any losses. The only difference between being offered a loan at a higher rate and the GEIA is the provision fund. This is not a fee but AC is setting aside potential profits into the fund to try to ensure you get the 7% and to minimise the losses (to nil if everything goes as planned). However, you should take independent tax advice.
No tax advice, got it, thanks. Wording the Q differently then; Given AC have to declare a figure to HMRC for everyone investing on the platform, what will that figure be based upon for funds invested in GEIA, 7% or c9.75%?
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Post by batchoy on Nov 27, 2014 17:44:41 GMT
GEIA. Questions have been asked over the tax treatment of the income. ASSETZ CAPITAL DO NOT OFFER TAX ADVICE AND ARE NOT SPECIALISTS IN THIS AREA. YOUR TAX LIABILITY IS FOR YOU TO DISCUSS WITH HMRC AND/OR A SPECIALIST TAX ADVISER. AC offers fixed rate returns with no fees and the GEIA is no different in that regard. The figure quoted is what you get subject to any losses. The only difference between being offered a loan at a higher rate and the GEIA is the provision fund. This is not a fee but AC is setting aside potential profits into the fund to try to ensure you get the 7% and to minimise the losses (to nil if everything goes as planned). However, you should take independent tax advice.
Whilst this is not an unexpected answer it does skirt the question which arises because the software implementation of the GEIA does not match the proposal. In the proposal the funds for the PF are defined amongst other sources as coming from the borrower's interest coupon i.e. the 7% cap is applied to what the borrower pays before it reaches the lender. Whereas what lenders are seeing is that the PF premium (for want of a better word) is being taken as an unrelated charge from the GEIA account, whilst numerically the result is the same, for tax purposes the result could be very different if HMRC see the PF Premiums as non-deductable fees. Since AC will be producing Tax Statements for this account and therefore must be aware of the HMRC view on P2P fees they must be able to answer the question as to the status of the PF Premium. Had the GEIA been implemented as described in the proposal with the capped interest being paid into lender's accounts then this question would not arise. To ask the question sightly differently, will the Tax Statement provided on the AC platform for the GEIA product show the interest Earned on the account Net or Gross of the PF Premium that appears in GEIA statements for the 2014/15 tax year and will this change for the 2015/16 tax year?
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bugs4me
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Post by bugs4me on Nov 27, 2014 18:04:46 GMT
GEIA. Questions have been asked over the tax treatment of the income. ASSETZ CAPITAL DO NOT OFFER TAX ADVICE AND ARE NOT SPECIALISTS IN THIS AREA. YOUR TAX LIABILITY IS FOR YOU TO DISCUSS WITH HMRC AND/OR A SPECIALIST TAX ADVISER. AC offers fixed rate returns with no fees and the GEIA is no different in that regard. The figure quoted is what you get subject to any losses. The only difference between being offered a loan at a higher rate and the GEIA is the provision fund. This is not a fee but AC is setting aside potential profits into the fund to try to ensure you get the 7% and to minimise the losses (to nil if everything goes as planned). However, you should take independent tax advice.
No tax advice, got it, thanks. Wording the Q differently then; Given AC have to declare a figure to HMRC for everyone investing on the platform, what will that figure be based upon for funds invested in GEIA, 7% or c9.75%? Correct - but no one AFAIK was asking for tax advice of any description. The question was simply what figure will AC declare to HMRC and lenders/investors. Will it be 7% or c9.75%. That's not tax advice and is a straightforward question. What we do with the answer is up to us as individuals.
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mikes1531
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Post by mikes1531 on Nov 27, 2014 18:48:46 GMT
GEIA. Questions have been asked over the tax treatment of the income. ASSETZ CAPITAL DO NOT OFFER TAX ADVICE AND ARE NOT SPECIALISTS IN THIS AREA. YOUR TAX LIABILITY IS FOR YOU TO DISCUSS WITH HMRC AND/OR A SPECIALIST TAX ADVISER. AC offers fixed rate returns with no fees and the GEIA is no different in that regard. The figure quoted is what you get subject to any losses. The only difference between being offered a loan at a higher rate and the GEIA is the provision fund. This is not a fee but AC is setting aside potential profits into the fund to try to ensure you get the 7% and to minimise the losses (to nil if everything goes as planned). However, you should take independent tax advice.
: I realise that AC do not offer tax advice -- and I am not asking for advice. What I am asking is... If, at the end of the year, my GEIA statement shows that I have been credited with £975 of interest, and debited with £275 of payments to the GEIA Provision Fund, what are AC going to report to HMRC? That is a question that AC are going to have to answer for themselves -- perhaps even having to ask their tax advisers to clarify. I need to know the answer to that question before I can ask my tax adviser to express an opinion as to what a GEIA investment would mean for my tax liability. And I will not invest anything other than a token, experimental, amount in my GEIA until AC provide that answer. Furthermore, I would suggest that it is in AC's interest to provide this answer sooner rather than later. I have no doubt that there will be a clear recommendation from forum users that anyone who pays tax and is considering investing in the GEIA should not invest anything while this question remains unanswered, and that will not help the GEIA attract the investment that AC no doubt are hoping that it will. Finally, I refer to your statement "AC offers fixed rate returns with no fees and the GEIA is no different in that regard." Please ask someone at AC to provide you with an example GEIA statement and have a look for yourself. I think you will see that the GEIA is very different!
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Post by bracknellboy on Nov 27, 2014 20:02:07 GMT
So the PF payments are not fees and thus cannot be used to offset against interest paid. So investors will be taxed as if they received 9% or 9.75% etc interest whilst only actually receiving 7%. The way the PF is arranged means that there is no tax advantage to be had, only a certain peace of mind, compared to investing directly and attempting diversification personally. A little disappointing for some but pretty academic once ISAs become available to the small/medium punters. So if the underlying pays 9%, for a 20% tax payer, the green account offers an equivalent of 6.5% gross or 5.2% after tax. That's if it is eventually confirmed as working that way. And perversly, the higher the rate on the underlying the lower the actual return that will be received. 9.75% and 45% taxpayer would give 2.61% net, and equivalent to achieving a 'normalised' gross rate of 4.75%. I can't believe that AC are really meaning to structure it this way. EDIT: Unless it really is only intended to be targeted at future ISA/NISAs. Oh, and what would happen if the PF built up and AC decided to distribute some back to investors rather than use it for its own purposes ? I would think such a distribution would probably have to be treated as some form of interst payment ..... :-)
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Post by batchoy on Nov 27, 2014 20:16:29 GMT
So the PF payments are not fees and thus cannot be used to offset against interest paid. So investors will be taxed as if they received 9% or 9.75% etc interest whilst only actually receiving 7%. The way the PF is arranged means that there is no tax advantage to be had, only a certain peace of mind, compared to investing directly and attempting diversification personally. A little disappointing for some but pretty academic once ISAs become available to the small/medium punters. So if the underlying pays 9%, for a 20% tax payer, the green account offers an equivalent of 6.5% gross or 5.2% after tax. That's if it is eventually confirmed as working that way. And perversly, the higher the rate on the underlying the lower the actual return that will be received. 9.75% and 45% taxpayer would give 2.61% net, and equivalent to achieving a 'normalised' gross rate of 4.75%. I can't believe that AC are really meaning to structure it this way. As you say it is perverse, since as the underlying interest increases you get to the point where the lender actually starts making a loss, this point obviously comes a lot earlier for higher rate tax payers. As for AC meaning to structure it this way reading the proposal the issue doesn't occur as the interest reads as being paid capped at 7%, where problem arises is in the implementation where according to the GEIA statements the interest is paid at the underlying loan rate and then interest over 7% is clawed back several hours later as a PF premium which is not linked to the interest payment and thus appears to all intents as a fee.
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Post by andrewholgate on Nov 28, 2014 8:58:23 GMT
I can see the confusion that the tax statements are creating.
The way it should work is that you get 7% with no fees. The statement should read 7% and show no deductions (it should not say 9.5% minus PF fee). Therefore, as a basic rate payer at 20% you should net 5.6% after tax.
I have asked that the tax statement is corrected ASAP so as to avoid this issue.
A
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pikestaff
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Post by pikestaff on Nov 28, 2014 9:31:07 GMT
andrewholgate Thank you! Just to be clear, as of now it's not the tax statements that need correcting (we don't have them yet), it's the transaction statements. If the transaction statements are fixed, and if you can confirm that the tax statements, and AC's returns of interest paid to HMRC, will show only the 7% then we are done.
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oldgrumpy
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Post by oldgrumpy on Nov 28, 2014 9:45:21 GMT
andrewholgate Thank you! Just to be clear, as of now it's not the tax statements that need correcting (we don't have them yet), it's the transaction statements. If the transaction statements are fixed, and if you can confirm that the tax statements, and AC's returns of interest paid to HMRC, will show only the 7% then we are done. (My red/bold in that quote) Aaaahhh! I hope we don't have to shout this any more to focus exactly on what the problem is, now that a response has been made. It shouldn't have taken so much repetition. pikestaff I'd tried to "like" your (previous to) last post for pin-point clarity, but in the meantime you'd zapped it because Andrew had replied. 
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Post by andrewholgate on Nov 28, 2014 9:46:27 GMT
andrewholgate Thank you! Just to be clear, as of now it's not the tax statements that need correcting (we don't have them yet), it's the transaction statements. If the transaction statements are fixed, and if you can confirm that the tax statements, and AC's returns of interest paid to HMRC, will show only the 7% then we are done. That is correct.
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sl75
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Post by sl75 on Nov 28, 2014 9:55:30 GMT
The way it should work is that you get 7% with no fees. The statement should read 7% and show no deductions (it should not say 9.5% minus PF fee). Therefore, as a basic rate payer at 20% you should net 5.6% after tax. I wonder if a more-correct technical procedure (at least from lenders' perspective) to follow could be: 1. All interest w.r.t. loan units held within the GEIA is initially paid to the PF 2. The PF makes the agreed 7% payment to lenders holding the loan units within their GEIA. This involves broadly the same calculations as the current system, but it is the PF that gets 2 entries on its statement and lenders see only one (being the 7% interest). If involving the PF directly would create other legal complications (e.g. PF only allowed to pay out for *claims*), it may be necessary to create an additional account (which perhaps could be dubbed the "reconciliation account" - I am not an accountant; perhaps there's a better name for it). 1. All interest w.r.t. loan units held within the GEIA is initially paid to the RA. 2. The RA makes the agreed 7% payment to lenders holding the loan units within their GEIA. 3. The RA forwards the balance of the payment to the PF. After processing each interest payment, the RA will always have a balance of zero, but allows the payment to be split without any party having 2 transactions.
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oldgrumpy
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Post by oldgrumpy on Nov 28, 2014 9:59:37 GMT
"the RA will always have a balance of zero"
... pronounced >>>>>>>>>>>>>>> £0.000000186737* 
* rounded down or up depending on how everything else squares up .... 
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mikeb
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Post by mikeb on Nov 28, 2014 10:37:13 GMT
Don't joke about it ...  |
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ramblin rose
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Post by ramblin rose on Nov 28, 2014 11:42:22 GMT
Quite - I was wondering just this morning how I was ever going to get my £0.0029727291021423 out of my cash account and into the MLIA so that my total investments match my MLIA total, as they should, and not be 1p adrift. If I were inclined to add any new money (which I'm not, until I'm confident that all accounting errors have been well and truly sorted on the site) it wouldn't help anyway, because I'd add whole numbers of pennies and I can only shift whole numbers of pennies between accounts. An option to sweep "all cash" from one account to another is the most obvious thing I can think of that would resolve this. In the meantime, life's too short...................
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