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Post by simons on May 1, 2020 11:38:18 GMT
With the large disclaimer that I know very little about this, this just seems very odd to me. Can one/should one really pencil in a loss of 50% (or indeed anything) for an investment product which has not declared any forthcoming loss/impairment? (beyond withdrawals being slowed). Could that not be perceived as tax avoidance? I'm just gonna repeat once more, I am speaking from a position of ignorance here and not accusing anyone of anything. It just sounds like declaring whatever losses you fancy based on very little info seems rather too convenient. What happens if you're wrong and they return 100% of your capital next year - would you then just pay tax on that 'reappeared' loss, or might you be considered as having shuffled around income to your tax benefit inappropriately? From what my accountant said, losses on P2P and only be offset against other P2P income firstly. But losses can be declared assuming a default has occured on the investment and that said default can be backed up. Any recoveries are then taxed forward. Losses can be rolled over for the following years. Personally, I think you have a hard time telling HMRC you have a 50% loss in a such a large investment, when all that has happened so far is queued withdrawals. You are still generating interest. Why should we pay tax on our interest and you don't have to? Just a question, but its true. Not advice, you should seek independant advice. If u have a good accountant you should be able to sort something if tax liability has become a issue because of the locked up funds. If you want to sell your loans for a 50% loss if AC bring up with SM for AA's anyimte soon feel free. I just think thats a tad very very high, if judging the MLA loans goes by anything. Maybe if you are first in, we'll see a spike of very high discounts because panic holders rushing out but I imagine you will suffer serious whiplash. I have independent advice - as I said at the start at the start of the thread, it was the accountants request for the number that kicked this off in the first place. Its a well known firm and I've used them for 20 years with p2p income for the last 7 or 8, so they know what they are doing. They bloody well should do for the amount it costs!
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Post by Harland Kearney on May 1, 2020 12:00:56 GMT
From what my accountant said, losses on P2P and only be offset against other P2P income firstly. But losses can be declared assuming a default has occured on the investment and that said default can be backed up. Any recoveries are then taxed forward. Losses can be rolled over for the following years. Personally, I think you have a hard time telling HMRC you have a 50% loss in a such a large investment, when all that has happened so far is queued withdrawals. You are still generating interest. Why should we pay tax on our interest and you don't have to? Just a question, but its true. Not advice, you should seek independant advice. If u have a good accountant you should be able to sort something if tax liability has become a issue because of the locked up funds. If you want to sell your loans for a 50% loss if AC bring up with SM for AA's anyimte soon feel free. I just think thats a tad very very high, if judging the MLA loans goes by anything. Maybe if you are first in, we'll see a spike of very high discounts because panic holders rushing out but I imagine you will suffer serious whiplash. I have independent advice - as I said at the start at the start of the thread, it was the accountants request for the number that kicked this off in the first place. Its a well known firm and I've used them for 20 years with p2p income for the last 7 or 8, so they know what they are doing. They bloody well should do for the amount it costs! It is just interesting, being that usally a default comes under "non income earning loan" and therefore can be written off as a loss in my books. However every single penny is earning interest in your loan holdings, so it is quite interesting that you are able to confirm a loss in that circumstances. Its a bit like holding a stock in negative -30% but not selling, then declaring it as a loss. It isnt' true until the transaction has been made or suspension. As for the loans held in default inside the AA already, well thats a bee nest and I think thats been a point of discussion since the start of the AA's. If you can claim it for tax relief by all means your affairs are your affairs, I am just very interested how accountant is coming to that conclusion/figure. Yes they do cost a arm and a leg quite right! 
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on May 1, 2020 12:09:21 GMT
I assume the accountants have read the relevant HMRC guidance and have PI so any issues with HMRC is on them. That said accountants don't seem to have a good record in P2P ...
Edit of course all those celebs had advice from accountants on tax ... didn't turn out well😜
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r00lish67
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Post by r00lish67 on May 1, 2020 12:41:01 GMT
Seems a tad difficult to justify given that your poll gives an average of roughly 12%. The poll gives an average of all investors, thats the problem. You are much more likely to experience a zero or low loss if you have a lower amount invested. With £200k I am going to be in the upper end of loss expectations. I'm going to put forward, rather less tentatively this time, that in the eyes of HMRC a proboards poll may not be considered sufficient grounds for calculating expected losses. Even if you do tweak bits and pieces. But whatevs, if you/your accountant are comfortable, go nuts* *Going nuts is not advice in dealing with your tax affairs, but it helps. 
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cb25
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Post by cb25 on May 1, 2020 12:51:31 GMT
From what my accountant said, losses on P2P and only be offset against other P2P income firstly. But losses can be declared assuming a default has occured on the investment and that said default can be backed up. Any recoveries are then taxed forward. Losses can be rolled over for the following years. Personally, I think you have a hard time telling HMRC you have a 50% loss in a such a large investment, when all that has happened so far is queued withdrawals. You are still generating interest. Why should we pay tax on our interest and you don't have to? Just a question, but its true. Not advice, you should seek independant advice. If u have a good accountant you should be able to sort something if tax liability has become a issue because of the locked up funds. If you want to sell your loans for a 50% loss if AC bring up with SM for AA's anyimte soon feel free. I just think thats a tad very very high, if judging the MLA loans goes by anything. Maybe if you are first in, we'll see a spike of very high discounts because panic holders rushing out but I imagine you will suffer serious whiplash. I have independent advice - as I said at the start at the start of the thread, it was the accountants request for the number that kicked this off in the first place. Its a well known firm and I've used them for 20 years with p2p income for the last 7 or 8, so they know what they are doing. They bloody well should do for the amount it costs! I'm curious about some aspects of you going with a 50% loss
1) Do you use the accountants because they know more about finance than you (as suggested by 'they know what they are doing') or they know no more than you but you use them anyway in order to free up time for doing other stuff? If it's the former - they know more - why are they asking you to come up with a figure?
2) Taking a loan of (say) 700K secured against assets nominally worth £1m, hence LTV 70% (many are lower). Going with 50% suggests you think the assets will only raise 350K. What makes you think assets will drop 65%?
3) Will you be sticking with your figure of 50% loss if/when a secondary market on access accounts is delivered? Whilst I have no idea what the assets will be worth, I would put money on the fact you'll be able to sell your access account holdings at lower discounts, e.g. 40% (I'd buy £10K of that any day). Imo hard to say you'll take a 50% loss if you can sell the loans at 40%.
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lara
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Post by lara on May 1, 2020 16:59:02 GMT
I have independent advice - as I said at the start at the start of the thread, it was the accountants request for the number that kicked this off in the first place. Its a well known firm and I've used them for 20 years with p2p income for the last 7 or 8, so they know what they are doing. They bloody well should do for the amount it costs! Just because they're expensive it doesn't mean that they are right!
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ceejay
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Post by ceejay on May 1, 2020 17:11:56 GMT
To be clear, I am absolutely not suggesting that this was OP's intention ... but if, hypothetically, someone were looking at the potential discounted market for AA holdings with a view to buying at deep discounts, and remembering that calculating a "fair" discounted price will be next to impossible, they might feel it was a good idea to set about lowering expectations in the hope of making a killing.
So, if anyone reading this is thinking that they will have to be sellers in this market for whatever urgent reason - I'd say they would be very well advised, when the market does appear, to start with very modest discounts and then adjust when the market has had time to take shape.
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cb25
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Post by cb25 on May 1, 2020 17:18:23 GMT
To be clear, I am absolutely not suggesting that this was OP's intention ... but if, hypothetically, someone were looking at the potential discounted market for AA holdings with a view to buying at deep discounts, and remembering that calculating a "fair" discounted price will be next to impossible, they might feel it was a good idea to set about lowering expectations in the hope of making a killing. So, if anyone reading this is thinking that they will have to be sellers in this market for whatever urgent reason - I'd say they would be very well advised, when the market does appear, to start with very modest discounts and then adjust when the market has had time to take shape. Having just read AC's email, I'm tempted to put in speculative "buy at 40%, 45%, 50% discounts" orders the minute the access account secondary market appears, in an attempt to be close to the head of the queue 
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gt94sss2
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Post by gt94sss2 on May 1, 2020 17:49:02 GMT
I assume the accountants have read the relevant HMRC guidance and have PI so any issues with HMRC is on them. That said accountants don't seem to have a good record in P2P ... Edit of course all those celebs had advice from accountants on tax ... didn't turn out well😜 I don't think PI is going to help simons as the accountant has asked him for a figure and not calculated it themselves. Hence, they will just be using information their client provided. As it is, imho, claiming 50% of the value as of the 5th April 2020 on QAA accounts is ridiculous and if I was HMRC I would be launching an investigation after I received that return. I would suggest simons reads the guidance very carefully - you can't just claim relief on "expected" or forecast losses Personally,t I it's actually difficult to justify any expected loss in 2019/20 on the QAA especially as its still paying interest. This tax year may be a different issue
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ilmoro
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Post by ilmoro on May 1, 2020 18:15:27 GMT
I assume the accountants have read the relevant HMRC guidance and have PI so any issues with HMRC is on them. That said accountants don't seem to have a good record in P2P ... Edit of course all those celebs had advice from accountants on tax ... didn't turn out well😜 I don't think PI is going to help simons as the accountant has asked him for a figure and not calculated it themselves. Hence, they will just be using information their client provided. As it is, imho, claiming 50% of the value as of the 5th April 2020 on QAA accounts is ridiculous and if I was HMRC I would be launching an investigation after I received that return. I would suggest simons reads the guidance very carefully - you can't just claim relief on "expected" or forecast losses Personally,t I it's actually difficult to justify any expected loss in 2019/20 on the QAA especially as its still paying interest. This tax year may be a different issue It was more in relation to the fact that they have suggested he can provide a figure to be claimed rather than advising him of the HMRC rules and criteria which would define how the figure has to be calculated. That suggests they have advised a tax position different to the normal interpretation of the HMRC rules and therefore would be liable if HMRC subsequently rejected that position. That is assuming it is an tax return for an individual rather than company. My position would be similar to yours. Claiming for losses on a blackbox account with a PF would be difficult to justify.
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alender
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Post by alender on May 1, 2020 18:44:12 GMT
I don't think PI is going to help simons as the accountant has asked him for a figure and not calculated it themselves. Hence, they will just be using information their client provided. As it is, imho, claiming 50% of the value as of the 5th April 2020 on QAA accounts is ridiculous and if I was HMRC I would be launching an investigation after I received that return. I would suggest simons reads the guidance very carefully - you can't just claim relief on "expected" or forecast losses Personally,t I it's actually difficult to justify any expected loss in 2019/20 on the QAA especially as its still paying interest. This tax year may be a different issue It was more in relation to the fact that they have suggested he can provide a figure to be claimed rather than advising him of the HMRC rules and criteria which would define how the figure has to be calculated. That suggests they have advised a tax position different to the normal interpretation of the HMRC rules and therefore would be liable if HMRC subsequently rejected that position. That is assuming it is an tax return for an individual rather than company. My position would be similar to yours. Claiming for losses on a blackbox account with a PF would be difficult to justify. I think this is for a company and may require an MTM value of assets in the reports and it will also effect the tax position. I believe this is some IFRS rule if the company has assets over £316,000 then this is a requirement but I stand to be corrected.
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Post by ian999 on May 3, 2020 15:47:28 GMT
2) Taking a loan of (say) 700K secured against assets nominally worth £1m, hence LTV 70% (many are lower). Going with 50% suggests you think the assets will only raise 350K. What makes you think assets will drop 65%?
Those figures were how I viewed a typical loan in AC. However it does assume that AC are competent both in themselves and in their ability to supervise their professionals to keep that security or take action against surveyors / solicitors if they haven't done due diligence properly. My experience with loan #435 where the losses are substantial as % of loan suggests otherwise.
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cb25
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Post by cb25 on May 3, 2020 15:50:57 GMT
2) Taking a loan of (say) 700K secured against assets nominally worth £1m, hence LTV 70% (many are lower). Going with 50% suggests you think the assets will only raise 350K. What makes you think assets will drop 65%?
Those figures were how I viewed a typical loan in AC. However it does assume that AC are competent both in themselves and in their ability to supervise their professionals to keep that security or take action against surveyors / solicitors if they haven't done due diligence properly. My experience with loan #435 where the losses are substantial as % of loan suggests otherwise. I wouldn't project what happened on any single loan - be it good or bad - onto the whole loan book.
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dead-money
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Post by dead-money on May 3, 2020 18:21:09 GMT
Hmm, well #435 is old, small and not in the Access Accounts portfolio.
The Access Accounts do hold defaulted development loans ; an incomplete development, particularly if not past the weatherproof point will be of questionable value.
Then there's the defaulted commerical loans ; Recovery value of those is anybody's guess.
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Mucho P2P
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Post by Mucho P2P on May 4, 2020 11:24:24 GMT
Unfortunately, taxation law states that if an accountant makes a mistake with a person’s tax returns, it’s the person who is liable and not the accountant.
Most accountants will also have themselves covered, by a limit on their liability in the T&C that the client agreed to when they engaged the accountant, and its usually a low amount, somewhere in the region of £10k. Unless agreed otherwise.
The only regular option is to take additional cover with your accountant, so that all HMRC investigations are covered at the accountant’s cost, then they are naturally more careful. The cost of the cover is a good indication as to how likely or not your accountant expects its clients to be investigated by HMRC, and ultimately how accurate/knowledgeable their advice is.
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