iRobot
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Post by iRobot on Mar 8, 2021 13:18:00 GMT
Doesnt surprise me that no discussion here, there is very little discussion of existing loans (very little discussion of P2P) and would be a very boring thread, got a £1 of #1156, got £1.30 of #1156 etc, that just cant compete with the excitement of Wickes offering wood in inches as well as mm. Oh & I also dont work for AC, though I do make work for AC. Two genuine laugh-out-loud moments there - thank you! 
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alender
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Post by alender on Mar 8, 2021 16:16:48 GMT
alender Thank you for picking me up on waxing lyrical about AAers in general. Of course I don’t know and nor can I guess or make assumptions about AAers motives for investing. My apologies. My points were badly worded. I’d rephrase the comments as follows. I see, and possibly many good finance service professionals, would see the AA products as “black box” products. I think it’s a reasonably well understood vernacular amongst some finance professionals but it’s not formal nomenclature. Furthermore no organisation would market a product as a “black box” as it has negative connotations but highly revealing of potential hidden surprises in the future. In defence of the products they are a lot more transparent than “black box opaqueness” might superficially suggest. I have no idea what AC thought nor what AAers thought individually or in the general. What is clear is that neither AC nor particularly AAers paid enough attention to adverse events. These products were ALWAYS only a liquidity event away from freezing up. I’m led to believe AA gave sufficient warning in the products key information to warn that access was subject to available liquidity. I haven’t looked at the literature so don’t have a view on whether sufficient caveats were given and my view would be irrelevant anyway. I only ever chucked a couple of hundred quid in to AAs to access the portfolio data, improve my understanding of AC and it’s retail products and strategy. I would have been prepared to pay £200 for those insights had I got my £200 frozen. As it is I sold at discounts of 3% to 6% and I’m getting some access to data for my last £2. I just need to resist any rush of blood to the head if the discounts widen and it’s possible to buy into the AAs at chunkier discounts. Thank you for the classification of your post, I think the difference between us is that I am heavily invested in AAs and have a lot more emotional feeling about the situation.
It started with withdrawals from the 30D account requested early last Feb blocked by AC just before lock in because they could not find the verification of my bank account which was already sent to them, I resent the information but they were so slow processing I could not get these funds before lock in had started. This is for an account which already had a number of successful withdrawals and they then locked it into the QAA because invest idle funds option was set which I did not know about and have no recollection of how this came about and neither do AC as they have no information on when how it was set etc. The funds requested for withdrawal are company funds to be used to pay salary tax and NI not as the result of panic. During the 30D withdrawal period last Feb I phoned AC to see if these funds are likely to be paid early march when I was informed they were not expecting any problems, never been any issues etc, with this news I did not think I need to make alternative arrangements. I then needed to loan my company money for this purpose which I intended to put into equities after the big drop caused by lock down. I put in what I could but this was reduced as all my AC funds are now locked and need to keep some cash for living and emergencies.
When I contacted AC to see if anything could be done to help me out I a got a polite but firm refusal and then came the pro rate situation making things even worse.
For those who say sell on the SM, I must admit I am very tempted but these are company funds, I do my own accounts and have no idea how to represent the loss in the accounts and this must be done otherwise the books will not balance. I have looked into this and it will cost me a fair bit of money to pay an accountant that specialises in this area, of course AC will not give the tax information on this.
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alender
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Post by alender on Mar 8, 2021 16:46:04 GMT
... So you are saying that the cash element was this large before lock in, I find that hard to believe especially as the lock in occurred because there was not enough cash to cover withdrawals, There are also some old posts on this board stating that AC came close to not having enough cash in the AAs to cover withdraws etc a time before lock in with far less cash than they have now. It may peek at the start of ISA season but I very much doubt it was this large (if at all) for so long before lock in. On 31/12/2019 AAs cash was circa £28m In early March 2020 there was clearly a run on AAs and it dropped to £2.3m on the 12th March. Shortly afterwards the withdrawals were frozen and a gradual rebuild of cash began. On 1st April it was circa £12m dipping to £10m on 8th April. There was then a long gradual building up with presumably some day-to-day week-to-week fluctuations. On 29th January 2021 the day before the big whopper distribution the cash was circa £44m. The next day it was circa £34m On 5th February 2021 the day before the second whopper distribution the cash was circa £37m. The next day it was circa £23m Currently it is circa £29m CUE accusations (not you alender ) that I’ve picked the dates to suit my argument, that I must be an AC cheerleader, or just simply a “tit”. I would not and have not stated that you are a AC cheer leader, you have one view I have another and certainly nothing worse as you have kindly acknowledged. I also do not believe you have picked the dates to suit your argument.
Using your figures the things I would like to add is
There is 1M more in cash in the AAs now than the highest figure you have found on 31/12/2019 if this is a reasonable average for the AAs (no reason to believe it is not) it is still higher now not just by 1M but larger in % terms because the AAs have reduced in size since then.
Why do AC have to keep a larger figure now when a large amount of future tranches have been funded.
Why did AC feel they should hold onto large sums of investors cash before the big payouts. If my funds were return earlier I would have invested these funds in equities (as I have already done to a smaller %) when they were cheaper. My guess is they were under pressure from the FCA to return funds as the FCA have stated they are not happy with institutions not returning excess funds during the Covid period.
For loses I did spend some time googling this but really only found a few opinions, no doubt this will be come clearer as more people suffer these loses and accountants ask other accountants for help in this area and publish the results on accountancy websites which can be seen by everyone. I could find no clear guidance from HMRC who if you ask them will tell you to go to an accountant.
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alender
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Post by alender on Mar 8, 2021 17:25:37 GMT
alender Some questions you might want to ask yourself 1) Can you take a 0.1%, 0.2%, .... discount loss on the chin and not worry about the quantum of this loss. 2) What causes you more worry/anguish; what might happen whilst your money is sitting in the AAs or grappling with how your going to do deal with some new-to-you line items in your DIY company accounts? Is the worry difference significantly big enough to help towards a decision. 3) Is it worth paying the discount to move from one “worry state” to another “lesser worry state”? These are good points
1) Yes of course no problem, more than coved by extra interest.
2) At present I am snowed under with many other issues caused by Covid and do not have the time to take on another one, the only way I can get a definitive answer to pay over quite a lot of money much greater than the 0.1%..0.2% loses (see additions to my last post), even if I have answer I will have to work out how to put this into the accountancy software package, again not easy to find.
3) As in the above answer I will have to take on one more problem which I realistically do not have at this time until this Covid crises is over, there are not only financial but personal issues with time, my health issues (not serious but more time consuming during the lock down period) also my partner is a manager in 3 care homes and a hands on career when required, she has been snowed under with problems, dealing with patients relatives, rule changes (every change causes a lot of work as she has to update the guidance to all staff), additional shifts (caused by careers not turning up for work and she has to stand in) etc. also a lot of long phone calls from staff and other people associated with the care homes with problems mostly caused by the covid criss but no covid itself. These calls are day, night and weekends the giving her more problems to solved which means I have to take up some of the other tasks she would normally do.
Also the loses or perhaps loss of potential gains (mitigating other loses) is much greater than if AC had paid these additional funds out when they could as explained they would have been used to buy equities.
I hope that when eventually the FOM gets to my cases they finds in my favour but that I fear will be some time off and of course the FOM could rule against me.
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alanh
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Post by alanh on Mar 8, 2021 18:55:58 GMT
alender Some questions you might want to ask yourself 1) Can you take a 0.1%, 0.2%, .... discount loss on the chin and not worry about the quantum of this loss. 2) What causes you more worry/anguish; what might happen whilst your money is sitting in the AAs or grappling with how your going to do deal with some new-to-you line items in your DIY company accounts? Is the worry difference significantly big enough to help towards a decision. 3) Is it worth paying the discount to move from one “worry state” to another “lesser worry state”? These are good points
1) Yes of course no problem, more than coved by extra interest.
2) At present I am snowed under with many other issues caused by Covid and do not have the time to take on another one, the only way I can get a definitive answer to pay over quite a lot of money much greater than the 0.1%..0.2% loses (see additions to my last post), even if I have answer I will have to work out how to put this into the accountancy software package, again not easy to find.
3) As in the above answer I will have to take on one more problem which I realistically do not have at this time until this Covid crises is over, there are not only financial but personal issues with time, my health issues (not serious but more time consuming during the lock down period) also my partner is a manager in 3 care homes and a hands on career when required, she has been snowed under with problems, dealing with patients relatives, rule changes (every change causes a lot of work as she has to update the guidance to all staff), additional shifts (caused by careers not turning up for work and she has to stand in) etc. also a lot of long phone calls from staff and other people associated with the care homes with problems mostly caused by the covid criss but no covid itself. These calls are day, night and weekends the giving her more problems to solved which means I have to take up some of the other tasks she would normally do.
Also the loses or perhaps loss of potential gains (mitigating other loses) is much greater than if AC had paid these additional funds out when they could as explained they would have been used to buy equities.
I hope that when eventually the FOM gets to my cases they finds in my favour but that I fear will be some time off and of course the FOM could rule against me.
I think the question you should ask yourself is how you would feel if the exit door was closed. At the moment it is possible to get your funds out by taking a small loss - whilst this is not ideal it is a million times better than the flat rate distribution system. AC have clearly demonstrated that they can only operate in benign market conditions and when things get difficult the stupid decisions start coming out and they start looking out for themselves. How would you feel if there is a rocky patch and they decide to start siphoning money out of large investors accounts again, or come up with some equally mad idea? I would very carefully weigh up the prospect of a future massive loss vs a small one now coupled with some tax admin. I would place preservation of capital firmly at the top of the priority list. I
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eeyore
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Post by eeyore on Mar 9, 2021 8:05:46 GMT
.............
For those who say sell on the SM, I must admit I am very tempted but these are company funds, I do my own accounts and have no idea how to represent the loss in the accounts and this must be done otherwise the books will not balance. I have looked into this and it will cost me a fair bit of money to pay an accountant that specialises in this area, of course AC will not give the tax information on this.
Oh dear! Why did you assume that "investing" in P2P loans would never result in losses? In any case, how do you propose to represent "profits" in your company accounts? Surely any interest or premiums will also prevent the books from balancing? Why not just treat defaults/losses/discounts as negative profits?
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Mikeme
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Post by Mikeme on Mar 9, 2021 8:30:31 GMT
Have we all forgotten that Covid was the worst financial/heath event in generations. The money invested in AAs can now be withdrawn and the interest was paid out. AC didn't collapse as some stated it would and they made decisions about how to distribute the withdrawal requests that the majority by number of investors understood. Before someone tells me that I got out early, I did however on my MLA account I was happy to get out half of my total investments at an average of about 4% which still gave me considerably more return than the banks etc. I was foolishly over invested in P2P so I still think that AC made the right choices for the majority. Looking at all of the posts been made since the crisis started it's the same small number of people complaining because they didn't think what was clearly laid out, UNDER NORMAL MARKET CONDITIONS. p2pindependentforum.com/thread/16983/time-stop-complainingng |
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marky
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Post by marky on Mar 9, 2021 8:33:37 GMT
I'm fully out now having previously held over £80,000 in AC ISA and non ISA accounts just before the country (and AC platform) lockdown began last March.
I only held on this long because a) I wasn't prepared to accept a huge haircut to liquidate and leave, b) I wanted access to 'incentive' funds so the capital loss I had to accept would be offset by the AC bonus for staying invested.
So - why did I leave? Answer is quite simply risk versus reward. For the first 5 months of lockdown (before SM launched) I had virtually zero liquidity whilst, at the same time, having the monthly interests cut by 40% or more.
After SM launched, I could only get liquidity with a 10% to 12% haircut. This slowly reduced but it was almost 10 months before the level of haircut became acceptable.
I didn't enter P2P expecting the same liquidity as holding money in a cash account. I understand there is risk.
But IMHO it's an unacceptable level of risk to hold (possibly) illiquid assets for such a paltry amount of monthly interest.
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alender
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Post by alender on Mar 9, 2021 8:40:19 GMT
.............
For those who say sell on the SM, I must admit I am very tempted but these are company funds, I do my own accounts and have no idea how to represent the loss in the accounts and this must be done otherwise the books will not balance. I have looked into this and it will cost me a fair bit of money to pay an accountant that specialises in this area, of course AC will not give the tax information on this.
Oh dear! Why did you assume that "investing" in P2P loans would never result in losses? In any case, how do you propose to represent "profits" in your company accounts? Surely any interest or premiums will also prevent the books from balancing? Why not just treat defaults/losses/discounts as negative profits? You obviously have no basic understanding about company accounts.
When I invested in AC AAs I was expecting to either not lose any money or there would be a resolution event and there is information on how to do deal with these loses in accounts, I was not expecting that they would be changed to a some sort of hybrid account/tradable instrument and there is no HMRC guidance (I can find) on the type of product created by AC, it may well be unique.
Just so you know negative profits are treated as loses in the accounts, some loses can be offset against tax some cannot. All loses and profits are not simply added in one box, there are many type of profits and loses to list but a few, capital gains/loses, interest, domestic dividends, foreign dividends, REIT income, equalisation payments, offshore reportable income (I deal with a lot more). All have to accumulated separately and enter in to the accounting software in one of the many hundreds of tags. First you have to find out what category the loss is in and then find the accounting software tag, even if I can identify the category there is a good chance that the accounting software manufactures have not created a tag for this category.
If I cannot enter the loses then the account software will not balance and will not allow me to submit my accounts to HMRC and Companies House and there is no other way to submit the accounts in which case I will be in breach of regulations and subject to fines with the end result is that the company will be struck off.
The only other options I have is to find an accountant to advise me but this will be very difficult, in the past I have found virtually none wants to give advice especially in a complex area such as this. However they will happy take on the accounts for decent fee and farm out to specialist tax advisers for an increased fee areas that they do not cover, expect additional fees in the hundreds of pounds an hour. Also I will have to spend many hours handing over the accounts
and many more if I wish to take the accounts back so I can process these myself.
However if you think you know more than me feel free to explain how to deal with these loses.
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ceejay
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Post by ceejay on Mar 9, 2021 9:32:31 GMT
You obviously have no basic understanding about company accounts.
When I invested in AC AAs I was expecting to either not lose any money or there would be a resolution event and there is information on how to do deal with these loses in accounts, I was not expecting that they would be changed to a some sort of hybrid account/tradable instrument and there is no HMRC guidance (I can find) on the type of product created by AC, it may well be unique.
<snip>
The only other options I have is to find an accountant to advise me but this will be very difficult, in the past I have found virtually none wants to give advice especially in a complex area such as this. However they will happy take on the accounts for decent fee and farm out to specialist tax advisers for an increased fee areas that they do not cover, expect additional fees in the hundreds of pounds an hour. Also I will have to spend many hours handing over the accounts
and many more if I wish to take the accounts back so I can process these myself.
However if you think you know more than me feel free to explain how to deal with these loses.
Thank you for explaining something that had seemed so extremely strange - why you were getting so upset about the whole thing and unwilling to take a tiny loss just to get out. I can't help you with the accounting question - I have a little experience but am not an expert - though it seems odd beyond belief that what you need to do is so hard. Have you tried asking the supplier of the accounting software? Nevertheless, we do I'm afraid come back to the same starting point. This peculiar situation is entirely of your own making - if even the slightest possibility of taking a loss were such a problem for you, you should never have come within a million miles of P2P, where all of the product descriptions (yes, including ACs) made it very clear that loss was a possibility. That doesn't help you now, of course. You just need to find the right box...
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alender
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Post by alender on Mar 9, 2021 10:06:53 GMT
You obviously have no basic understanding about company accounts.
When I invested in AC AAs I was expecting to either not lose any money or there would be a resolution event and there is information on how to do deal with these loses in accounts, I was not expecting that they would be changed to a some sort of hybrid account/tradable instrument and there is no HMRC guidance (I can find) on the type of product created by AC, it may well be unique.
<snip>
The only other options I have is to find an accountant to advise me but this will be very difficult, in the past I have found virtually none wants to give advice especially in a complex area such as this. However they will happy take on the accounts for decent fee and farm out to specialist tax advisers for an increased fee areas that they do not cover, expect additional fees in the hundreds of pounds an hour. Also I will have to spend many hours handing over the accounts
and many more if I wish to take the accounts back so I can process these myself.
However if you think you know more than me feel free to explain how to deal with these loses.
Thank you for explaining something that had seemed so extremely strange - why you were getting so upset about the whole thing and unwilling to take a tiny loss just to get out. I can't help you with the accounting question - I have a little experience but am not an expert - though it seems odd beyond belief that what you need to do is so hard. Have you tried asking the supplier of the accounting software? Nevertheless, we do I'm afraid come back to the same starting point. This peculiar situation is entirely of your own making - if even the slightest possibility of taking a loss were such a problem for you, you should never have come within a million miles of P2P, where all of the product descriptions (yes, including ACs) made it very clear that loss was a possibility. That doesn't help you now, of course. You just need to find the right box... On your first point I do not use the accounting software myself so do not have an account with them, but before you add the figures in the boxes you must first find a place in the accounts. I have used trial copies and have found a very friendly accountant that works from home on her own who takes the tags and puts it into her software for a fee equivalent to buying the software. She also does a bit of a once over of the accounts and always comes to same conclusion that to the best of her knowledge they are correct. She is used to preparing small company accounts but my accounts are too complicated for her to prepare due to the different type of investments but she is happy do what she can with some basic checks and submission but does not want to take them on fully. I do not want to get her involved for the reasons above and she is already very much snowed under with all the additional work around Covid for the companies she handles.
On your point about investing in P2P, I did look at potential loses and how these can be handled in the accounts but as I said I expected these to come via a resolution event where there is guidance to how to enter them into the accounts, long story short they first have to written off for tax purposes and I am prepared for this situation. I was expecting to either exit out via the route of withdrawals or a run off taking a few years, either way I can handle the accounts. However I never expected my funds to be converted into some sort of tradeable instrument unique to AC where there is no guidance for accounts. As these funds are tied up for more than I planned under the worse case scenario of a resolution event I have to lend my company my own money to cover costs until I can either find a way to put these into the accounts or they are paid out. I have already spent a lot of time researching this area but with the many other things going on in my life as a result of covid policy I do not have any time to deal with another complex issue so for now it will have to stay as it is.
Unfortunately there may not be a right box as the software for small company accounts will probably not be built with such a box as this is a one off situation, it would probably require specialist software for investment companies.
In the past when you submitted accounts in PDF form I may have been able to wing it but with electronic submission it is a lot more difficult.
I sure there are specialist accountants who can handle the situation but as I said I would have to hand over all the accounts for them to prepare and this will involve a lot of work and great cost.
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jlend
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Post by jlend on Mar 9, 2021 11:20:21 GMT
Oh dear! Why did you assume that "investing" in P2P loans would never result in losses? In any case, how do you propose to represent "profits" in your company accounts? Surely any interest or premiums will also prevent the books from balancing? Why not just treat defaults/losses/discounts as negative profits? You obviously have no basic understanding about company accounts.
When I invested in AC AAs I was expecting to either not lose any money or there would be a resolution event and there is information on how to do deal with these loses in accounts, I was not expecting that they would be changed to a some sort of hybrid account/tradable instrument and there is no HMRC guidance (I can find) on the type of product created by AC, it may well be unique.
Just so you know negative profits are treated as loses in the accounts, some loses can be offset against tax some cannot. All loses and profits are not simply added in one box, there are many type of profits and loses to list but a few, capital gains/loses, interest, domestic dividends, foreign dividends, REIT income, equalisation payments, offshore reportable income (I deal with a lot more). All have to accumulated separately and enter in to the accounting software in one of the many hundreds of tags. First you have to find out what category the loss is in and then find the accounting software tag, even if I can identify the category there is a good chance that the accounting software manufactures have not created a tag for this category.
If I cannot enter the loses then the account software will not balance and will not allow me to submit my accounts to HMRC and Companies House and there is no other way to submit the accounts in which case I will be in breach of regulations and subject to fines with the end result is that the company will be struck off.
However if you think you know more than me feel free to explain how to deal with these loses.
When I had a small limited company, I personally never tried to do my own accounts. I always thought the small cost of paying someone externally was well worth the money and a necessary cost of doing business. My time was better spent on earning more money etc. I am confident that in my situation I made more net money by using an accountant over the years, as well as peace of mind that I had done everything possible to do the right thing over many years prior to closing the company. That is not to say I didn't take an interest and personal liability and query things, but I didn't try and become an expert or assume I was knowledgeable enough on my own. I am not saying you should do the same as I don't know your circumstances or experience etc. You may or may not find it beneficial in paying for a regular service or one off service this year. A quick search on Google will provide the names of online accountants with good reviews, but you may know people who could recommend an accountant. Out of curiosity how much have you been quoted, assuming you have asked which I may have misunderstood? Alternatively raising a call with HMRC may help. They have certainly helped me a couple of times,of course I can't say they will be useful this time though, they may simply say ask an accountant or point you to some documents. Personally even if you get feedback on this forum from someone very knowledgeable who has filled in their company tax return in a similar situation I personally would still pay an accountant to assist in filing the return if you are not confident. You could also try asking the question on one of the accounting forums where p2p questions often pop up. At the very least this might provide you with a bit more knowledge. www.accountingweb.co.uk/any-answers/how-is-p2p-interest-taxed-for-companiesOverall at the end of the day you are asking for some expert advice so personally it's probably not unreasonable to pay someone for that advice?
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ceejay
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Post by ceejay on Mar 9, 2021 11:31:39 GMT
...
Unfortunately there may not be a right box as the software for small company accounts will probably not be built with such a box as this is a one off situation, it would probably require specialist software for investment companies.
...
At the risk of oversimplifying... you can't offset any loss against profits elsewhere, but you can certainly offset them against other P2P profits, also known as the interest that AC have paid you. If you were to cash in with a small exit penalty, could you not just offset the exit fee against the final reported interest? EG £1000 capital + £50 interest - £2 exit fee reported as £48 interest. I have a strong intuition that you may be making this harder for yourself than you need to.
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alender
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Post by alender on Mar 9, 2021 11:39:40 GMT
...
Unfortunately there may not be a right box as the software for small company accounts will probably not be built with such a box as this is a one off situation, it would probably require specialist software for investment companies.
...
At the risk of oversimplifying... you can't offset any loss against profits elsewhere, but you can certainly offset them against other P2P profits, also known as the interest that AC have paid you. If you were to cash in with a small exit penalty, could you not just offset the exit fee against the final reported interest? EG £1000 capital + £50 interest - £2 exit fee reported as £48 interest. I have a strong intuition that you may be making this harder for yourself than you need to. I know you can do this for P2P loses but they have to be written off but there is no information for trading out at loss, the only thing I can find suggests this is not allowed, it may be a capital loss as it is a tradable instrument but as this is such a unique product there is not information on how to handle it, also it is more complicated as I bought this as a P2P account.
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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 Mar 9, 2021 12:05:42 GMT
...
Unfortunately there may not be a right box as the software for small company accounts will probably not be built with such a box as this is a one off situation, it would probably require specialist software for investment companies.
...
I have a strong intuition that you may be making this harder for yourself than you need to. Tend to agree. FC suggests that selling loans may give rise to profits/losses under the Loan Relationship rules and I dont see this as being any different. To a casual viewer it would seem to fall under the non-trading loan relationships www.gov.uk/hmrc-internal-manuals/corporate-finance-manual/cfm32030Asking HMRC would seem the logical step.
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