p2pfan
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Post by p2pfan on Sept 13, 2022 16:31:08 GMT
Most of the loans that show as defaulted in 2022/3 tax year, actually defaulted in 2021/2 tax year. Therefore if ablrate had done this correctly, those that paid tax for 2021/2 tax year, could have had this sum set against their tax bill. In some cases the tax bill could have reduced to £0 with the surplus used to set against future years. Am I right. Can HMRC be persuaded ? Is there a work around on this ? That's a very reasonable point about the tax years. ACI and AF haven't paid a penny in interest since the last tax year. However, my impression was that we could only use such loans to write-off tax earned that is due on other P2P profits if the loans are irrecoverable. Therefore, not just classified as in default but having the status of not being recoverable?
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hubert
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Post by hubert on Sept 13, 2022 16:34:57 GMT
Most of the loans that show as defaulted in 2022/3 tax year, actually defaulted in 2021/2 tax year. Therefore if ablrate had done this correctly, those that paid tax for 2021/2 tax year, could have had this sum set against their tax bill. In some cases the tax bill could have reduced to £0 with the surplus used to set against future years. Am I right. Can HMRC be persuaded ? Is there a work around on this ? That's a very reasonable point about the tax years. ACI and AF haven't paid a penny in interest since the last tax year. However, my impression was that we could only use such loans to write-off tax earned that is due on other P2P profits if the loans are irrecoverable. Therefore, not just classified as in default but having the status of not being recoverable? I believe the defaulted loans can be claimed against tax, but once any are recovered they should be added back as a plus on your tax return.
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blender
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Post by blender on Sept 13, 2022 16:41:16 GMT
Loans are in default a few days after they miss a payment. I think they have to be at least placed formally in default by Ablrate and losses crystallised before there is a question of a tax reclaim. And also that the losses cannot be set against non-p2p taxable income. There are experts out there who will know the exact rules, but I would not expect much flexibility.
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qwakuk
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Post by qwakuk on Sept 13, 2022 16:48:25 GMT
That's a very reasonable point about the tax years. ACI and AF haven't paid a penny in interest since the last tax year. However, my impression was that we could only use such loans to write-off tax earned that is due on other P2P profits if the loans are irrecoverable. Therefore, not just classified as in default but having the status of not being recoverable? I believe the defaulted loans can be claimed against tax, but once any are recovered they should be added back as a plus on your tax return. I claimed the losses in my 2022 tax return, reduced what I will owe in January 2023
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hubert
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Post by hubert on Sept 13, 2022 16:52:34 GMT
I believe the defaulted loans can be claimed against tax, but once any are recovered they should be added back as a plus on your tax return. I claimed the losses in my 2022 tax return, reduced what I will owe in January 2023 Trouble is, the losses are only shown for 2022/3 tax year, if HMRC checks up on your return.
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ilmoro
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Post by ilmoro on Sept 13, 2022 17:22:42 GMT
The loans have to be declared as having become irrecoverable by the platform (ie on the tax statement though annoying abl dont indicate which loans are included) or be eligible to be treated as irrecoverable which a lender can self declare. To eligible loans need to have no prospect or recovery outside of formal legal recovery ie administration, receivership or some other legal process. Just being in default isnt general considered sufficient.
As formal demand has only now be issued on the ACI loans they wont qualify under the 2nd definition until this tax year. (2022-3) AF loans dont qualify currently.
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hubert
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Post by hubert on Sept 13, 2022 17:40:13 GMT
The loans have to be declared as having become irrecoverable by the platform (ie on the tax statement though annoying abl dont indicate which loans are included) or be eligible to be treated as irrecoverable which a lender can self declare. To eligible loans need to have no prospect or recovery outside of formal legal recovery ie administration, receivership or some other legal process. Just being in default isnt general considered sufficient. As formal demand has only now be issued on the ACI loans they wont qualify under the 2nd definition until this tax year. (2022-3) AF loans dont qualify currently. Could it be the 2022/3 defaulted loans are the ones highlighted in orange, under 'Current Investments' Can a loan be self declared as irrecoverable even if it has not been defaulted ?
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GreenZero
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Post by GreenZero on Sept 13, 2022 17:47:42 GMT
The loans have to be declared as having become irrecoverable by the platform (ie on the tax statement though annoying abl dont indicate which loans are included) or be eligible to be treated as irrecoverable which a lender can self declare. To eligible loans need to have no prospect or recovery outside of formal legal recovery ie administration, receivership or some other legal process. Just being in default isnt general considered sufficient. As formal demand has only now be issued on the ACI loans they wont qualify under the 2nd definition until this tax year. (2022-3) AF loans dont qualify currently. That was my understanding. So I am a little confused following Abl recent updates as why the following loans meet this criteria. # 158 # 113 162 142 160 164 111 165 161 # 152 149 151 # 110 100 And if the above do, then why the follwoing don't? # 119 92 87 99 118 76
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qwakuk
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Post by qwakuk on Sept 13, 2022 19:39:19 GMT
I claimed the losses in my 2022 tax return, reduced what I will owe in January 2023 Trouble is, the losses are only shown for 2022/3 tax year, if HMRC checks up on your return. I am relying on the following paragraph and the section I have put in bold SAIM 12050 When is a peer to peer loan treated as irrecoverable? When does a peer to peer loan become irrecoverable A peer to peer loan may be accepted as having become irrecoverable when there is no reasonable prospect of the recovery of the loan. When assessing recoverability, the funds available and potentially available to the borrower must be considered. A claim therefore cannot be established simply because the borrower has insufficient liquidity on the date the loan had been called in. Whether a loan has become irrecoverable should be judged on a case by case basis, however as the loan will be managed by a platform, the platform would usually be in a position to determine when a loan has become irrecoverable. The platform would then inform the lender that the loan had become irrecoverable. If the platform does not undertake this action, then the lender may still determine that the loan has become irrecoverable. However it will be the responsibility of the lender to show that there is no reasonable prospect of the recovery of the loan and it is NOT simply a case of late payment.Not worried about HMRC, it is after all an opinion and two months on Ablrate have now marked them as irrecoverable. If and when they raise an enquiry, we should no more about how much we have actually lost.
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hubert
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Post by hubert on Sept 13, 2022 19:55:23 GMT
Trouble is, the losses are only shown for 2022/3 tax year, if HMRC checks up on your return. I am relying on the following paragraph and the section I have put in bold SAIM 12050 When is a peer to peer loan treated as irrecoverable? When does a peer to peer loan become irrecoverable A peer to peer loan may be accepted as having become irrecoverable when there is no reasonable prospect of the recovery of the loan. When assessing recoverability, the funds available and potentially available to the borrower must be considered. A claim therefore cannot be established simply because the borrower has insufficient liquidity on the date the loan had been called in. Whether a loan has become irrecoverable should be judged on a case by case basis, however as the loan will be managed by a platform, the platform would usually be in a position to determine when a loan has become irrecoverable. The platform would then inform the lender that the loan had become irrecoverable. If the platform does not undertake this action, then the lender may still determine that the loan has become irrecoverable. However it will be the responsibility of the lender to show that there is no reasonable prospect of the recovery of the loan and it is NOT simply a case of late payment.Not worried about HMRC, it is after all an opinion and two months on Ablrate have now marked them as irrecoverable. If and when they raise an enquiry, we should no more about how much we have actually lost. Interesting. Are you referring to a specific loan or loans.
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qwakuk
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Post by qwakuk on Sept 13, 2022 19:57:05 GMT
I am relying on the following paragraph and the section I have put in bold SAIM 12050 When is a peer to peer loan treated as irrecoverable? When does a peer to peer loan become irrecoverable A peer to peer loan may be accepted as having become irrecoverable when there is no reasonable prospect of the recovery of the loan. When assessing recoverability, the funds available and potentially available to the borrower must be considered. A claim therefore cannot be established simply because the borrower has insufficient liquidity on the date the loan had been called in. Whether a loan has become irrecoverable should be judged on a case by case basis, however as the loan will be managed by a platform, the platform would usually be in a position to determine when a loan has become irrecoverable. The platform would then inform the lender that the loan had become irrecoverable. If the platform does not undertake this action, then the lender may still determine that the loan has become irrecoverable. However it will be the responsibility of the lender to show that there is no reasonable prospect of the recovery of the loan and it is NOT simply a case of late payment.Not worried about HMRC, it is after all an opinion and two months on Ablrate have now marked them as irrecoverable. If and when they raise an enquiry, we should no more about how much we have actually lost. Interesting. Are you referring to a specific loan or loans. From memory, I went for the whole lot apart from Pea Won which hopefully will repay this / next month
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ilmoro
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Post by ilmoro on Sept 13, 2022 20:18:15 GMT
No idea the criteria Abl are using ... if theyve declared the loans to have become irrecoverable then lenders can claim loss relief as it meets the first HMRC criteria. Key thing is what year they declared them on the tax statement as that will be the earliest point lenders can claim for anything not meeting the second criteria. (ABL seem quick to declare stuff so unlikely lenders would need to self declare)
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p2pfan
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Post by p2pfan on Sept 13, 2022 20:31:28 GMT
Most of my defaults on ABL are to AF and ACI. I have studied all of the above comments, but am little the wiser. Just to clarify, will we be able to write those off against taxable profits on P2P platforms or not? While these loans are now coloured as orange on the 'Current Investments' section of the Dashboard at platform.ablrate.com/NewUI/Lender/Dashboard/Current.aspx , what exactly does that mean? I am sure HMRC would question me if I tried to write-off these loans as defaults and then I'd need to be able to justify matters because it'd bring my tax bill down massively from previous years. |
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ilmoro
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Post by ilmoro on Sept 13, 2022 20:32:36 GMT
Trouble is, the losses are only shown for 2022/3 tax year, if HMRC checks up on your return. I am relying on the following paragraph and the section I have put in bold SAIM 12050 When is a peer to peer loan treated as irrecoverable? When does a peer to peer loan become irrecoverable A peer to peer loan may be accepted as having become irrecoverable when there is no reasonable prospect of the recovery of the loan. When assessing recoverability, the funds available and potentially available to the borrower must be considered. A claim therefore cannot be established simply because the borrower has insufficient liquidity on the date the loan had been called in. Whether a loan has become irrecoverable should be judged on a case by case basis, however as the loan will be managed by a platform, the platform would usually be in a position to determine when a loan has become irrecoverable. The platform would then inform the lender that the loan had become irrecoverable. If the platform does not undertake this action, then the lender may still determine that the loan has become irrecoverable. However it will be the responsibility of the lender to show that there is no reasonable prospect of the recovery of the loan and it is NOT simply a case of late payment.Not worried about HMRC, it is after all an opinion and two months on Ablrate have now marked them as irrecoverable. If and when they raise an enquiry, we should no more about how much we have actually lost. The question would be could you determine there was no reasonable prospect of recovery on the information available... if the borrower isnt insolvent then potentially there are funds available & potentially available until the point they become insolvent. I think you would struggle to prove the position. Im not even sure Ablrate can really argue the position ... the AF power loans woiuld appear to be a case in point as funds have been injected so were potentially available. However, as you say, provided you are confident that you can defend your claim then its not an unreasonable position. Tax is often a grey area until HMRC decide it isnt.
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ilmoro
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Post by ilmoro on Sept 13, 2022 20:39:13 GMT
Most of my defaults on ABL are to AF and ACI. I have studied all of the above comments, but am little the wiser. Just to clarify, will we be able to write those off against taxable profits on P2P platforms or not? While these loans are now coloured as orange on the 'Current Investments' section of the Dashboard at platform.ablrate.com/NewUI/Lender/Dashboard/Current.aspx , what exactly does that mean? I am sure HMRC would question me if I tried to write-off these loans as defaults and then I'd need to be able to justify matters because it'd bring my tax bill down massively from previous years. AIUI and having reconciled each of my orange loans against the ABL tax statement for the relevant tax year, orange loans are those that ABL have declared as becoming irrecoverable and therefore eligible for loss relief. So yes in my non advisory opinion you would be able to write off those loans against taxable profits on other qualifying platforms (ie FCA authorised for operating an electronic platform for lending) for the financial year 2022/23 (thats when ABL declared ACI, AF power, and APF loans). Claim them against an earlier year would require you to make the determination yourself as qwakuk has done and be able to justifiy it. Abl will inform HMRC of your net income for the financial year (as will other platforms) so HMRC will be able to determine discrepancies if they look/do the maths. So make sure you have records of what you do & why.
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