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Post by Deleted on Jan 31, 2015 4:52:55 GMT
Hi,
Are people declaring their loan interests to the Inland Revenue, when it's the only income not already taxed (e.g. rest is PAYE)?
I have registered with three P2P platforms, and not a single one has requested a NI number.
I remember a person telling me that they were a high tax payer, and yet never declared any interests from their savings accounts from several large UK banks (only taxed 20% at source), despite the bank having their NI number, and having multiple savings accounts for more than 10 years. The Inland Revenue never claimed the missing 20% tax, although it's clear they would get files/databases from banks.
They also sold a large amount of free shares from their employer, only taxed at 20% at source, and again HMRC never claimed the difference (despite the sale being done through one of the leading broker, and with NI details).
If the Inland Revenue cannot cross check that kind of reliable information, I wonder what's the status for smaller P2P platforms, and if they even have the resources and aspiration to check those typically small incomes. It might be more "productive" for HMRC to go after independant traders, large tax payers etc.
Also, apparently, official advice is now not to fill a tax return if tax owed is less than £3,000, and main income tax is already collected through PAYE. In that case, just a call to HMRC is sufficient, to adjust the tax code.
Thanks,
S.
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Mike
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Post by Mike on Jan 31, 2015 11:33:50 GMT
I can also go to my local corner shop and basically guarantee I won't get caught stealing a twix. If I did that, I wouldn't ask about it online however. You should seek professional advice if you are unsure and shouldn't suggest evasion here I don't think...
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Post by Deleted on Jan 31, 2015 12:05:19 GMT
I am very sure on wheter tax is required to be paid or not (don't need professional advice for that), and I am surely not advising on tax evasion!
I am even advising on how to pay a small amount of due tax without filling in a full tax return! I think you misread my post...
When you purchase your iPhone 6 for £600 next time, I do hope you remember to pay the Inland Revenue the company tax owed on the profit made (which is probably £200 x tax rate 21% = £42). Same applies when you purchase iPhone apps or ebooks at 17.5% VAT rate instead of 20%. The Inland Revenue is surely working to crack down on this.
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bigfoot12
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Post by bigfoot12 on Jan 31, 2015 12:17:02 GMT
Are people declaring their loan interests to the Inland Revenue... Implying some might not. Implying that evading tax might be easy. I know a tax evader... ... who evaded tax in more than one way. Seems to be a good chance I'll get away with it. See previous. Which part did Mike misread? Your final point that official advice is to inform HMRC of interest directly rather than completing the self assessment process sounds credible but it doesn't fit with the rest of your post.
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Post by Deleted on Jan 31, 2015 12:22:11 GMT
You are free to make your own interpretation of my questions...
I was just very surprised that none of the P2P platforms I used were asking for NI numbers, as all other investment platforms typically do.
It's also very surprising that none of the ones I tried are taking 20% tax at source (which would be a good start).
However, I am under no doubt that they will submit interest earned by their customers to the Inland Revenue, when asked.
And BTW, I know some other tax invaders, owing billions in tax: Apple, Google, Amazon, Starbucks etc.
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bigfoot12
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Post by bigfoot12 on Jan 31, 2015 12:31:51 GMT
I don't think any tax at source at the moment, I haven't heard of one. They will start doing so soon. They have been unregulated or very lightly regulated until now. I don't know, but my guess is that they only need the NI number when they do deduct tax so that they can say that they have paid it on your behalf. If you think about it, it works both ways. On my tax return yes I am saying that I have some income, but if tax has been deducted, I am saying that someone else has paid some of that tax already.
I agree on your final point. I think that we should scrap corporation tax and stick VAT up a bit instead.
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Mike
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Post by Mike on Jan 31, 2015 13:12:42 GMT
I was just very surprised that none of the P2P platforms I used were asking for NI numbers, as all other investment platforms typically do. Some platforms do not require lenders to be UK (or even EU) resident, for starters, so it might be tricky to require NI numbers from everyone. Some lenders may be non-resident for tax purposes, but still have an NI number. Banks meanwhile, rely on the account holders word when it comes to tax deduction (in my experience). If I tell my bank not to deduct tax on interest, they will do as I say - and won't check if I am lying (after all, why should they - I'm an honest guy!).
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Mike
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Post by Mike on Jan 31, 2015 13:16:57 GMT
I was just very surprised that none of the P2P platforms I used were asking for NI numbers, as all other investment platforms typically do. For the record, I was not accusing you of anything. But some platforms allow non-UK (and non-EU) residents to lend. If an NI number were required, what should these people do? Other lenders may have an NI number but be non resident for tax purposes. What about those? By the way, my experience is that banks take account holders word on taxation. If I tell my bank I don't deserve tax deduction on interest, they will do as I say - and won't check (at least necessarily) if I am being honest. I have wondered what would happen if I earned over £10K interest on one account at a bank, and gave instruction not to deduct tax. Would they assume I had a justification elsewhere or question it?
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Post by lynnanthony on Jan 31, 2015 18:24:51 GMT
I seem to recall reading somewhere that P2P sites are required or will be required to supply the tax man with a list of names and addresses of lenders. It would not be a major job to run those lists against their database to see who has declared P2P earnings ....
OP knows someone not declaring income to the taxman. Who else knows? It only takes one disgruntled ex-friend (or ex-wife) to shop him, one quick phone call might do it, and cause a world of pain.
Not worth the risk, IMHO.
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shimself
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Post by shimself on Jan 31, 2015 19:09:08 GMT
I opened a thread yesterday aon Funding Knight who are withholding tax on non-UK investors (providing the loan is for over 12 months duration). The personal replies from FK to date are just the robotic sort; nobody else does it, and they say if I send a document (unspecified) then they won't withhold after all, which sounds like the R105 that I have to send to banks etc.
To answer xell's point a couple of platforms, not all, have asked for my French tax id number. Every platform has done an id check with French gas bills etc, as far as I can see they have all done some crosschecking so they can say they "know their customer". otoh my stupid bank refused to open a USD dollar account the other day on the grounds that erm, they weren't sure they knew me, despite my being a customer for 30 years, because they hadn't seen a copy of my renewed passport (which actually they had)
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mikes1531
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Post by mikes1531 on Jan 31, 2015 23:42:00 GMT
OP knows someone not declaring income to the taxman. Who else knows? It only takes one disgruntled ex-friend (or ex-wife) to shop him, one quick phone call might do it, and cause a world of pain. IIRC, HMRC used to offer rewards/bounties to people who alerted them to tax dodgers. If that's still the case, that could be a pretty risk-free way to generate a return. And the OP might do better with that than by investing in P2P!
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pikestaff
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Post by pikestaff on Feb 1, 2015 9:22:20 GMT
Obviously you should pay your tax. It's an offence not to.
If you don't declare income that you should, then when HMRC catches up with you (which they are getting better at) there will be significant penalties. You also risk an investigation of your tax affairs going back years, which would be very painful. The OP's "friend" would be at high risk of that IMO.
Banks have long been required to provide HMRC with details of interest paid to their customers, and this has been required of p2p platforms since at least the start of the present tax year. AIUI the obligation does not kick in until HMRC asks, so there might be some new/smaller platforms that HMRC has not asked yet.
HMRC does check. In the last 2-3 years my wife and I have both had letters from HMRC about bank accounts.
- In one case my wife had forgotten to revoke R85 "gross" status on a current account with a nil balance. (She had a term deposit with the same provider, and it was one of those which forces you to open a current account in order to make the deposit.) She agreed to fix it and that was the end of the matter.
- In the other I'd not declared the income on an account in my name. There was a good reason for this - I held the cash on behalf of a family trust and the income was declared in the trust's tax return (which went to a different office). I gave my tax office chapter and verse and they went away happy.
On the specific example of employee bonus shares, mentioned in the OP, HMRC changed the rules a couple of years ago so that tax is deducted at the employee's marginal rate - presumably because of concerns about under-declaration.
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webwiz
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Post by webwiz on Feb 1, 2015 18:20:30 GMT
I seem to recall reading somewhere that P2P sites are required or will be required to supply the tax man with a list of names and addresses of lenders. It would not be a major job to run those lists against their database to see who has declared P2P earnings .... OP knows someone not declaring income to the taxman. Who else knows? It only takes one disgruntled ex-friend (or ex-wife) to shop him, one quick phone call might do it, and cause a world of pain. Not worth the risk, IMHO. Agreed. And the financial pain is the least of it. The admin would be a nightmare.
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webwiz
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Post by webwiz on Feb 1, 2015 18:26:44 GMT
And BTW, I know some other tax invaders, owing billions in tax: Apple, Google, Amazon, Starbucks etc. I don't recognise the term tax invader. Tax evasion is illegal but the firms you mention have not been found to have done this. Tax avoidance is perfectly legal and we all do it. The fact that out tax legislation is so complex that the big companies can afford tax avoidance experts to avoid paying much tax is not their fault - it is primarily the fault of the government and indirectly the fault of voters in a democracy.
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shimself
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Post by shimself on Feb 1, 2015 20:01:27 GMT
And BTW, I know some other tax invaders, owing billions in tax: Apple, Google, Amazon, Starbucks etc. I don't recognise the term tax invader. Tax evasion is illegal but the firms you mention have not been found to have done this. Tax avoidance is perfectly legal and we all do it. The fact that out tax legislation is so complex that the big companies can afford tax avoidance experts to avoid paying much tax is not their fault - it is primarily the fault of the government and indirectly the fault of voters in a democracy. It seems to be the fault of all governments all over the world doesn't it?
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