ablender
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Post by ablender on Dec 31, 2015 16:55:11 GMT
I created this thread to counter act the other thread called "Secondary Market Now Available". The reason? Simple. I do not feel that the secondary market as it stands today is available to me. Full Stop.
Any one shares the same feeling?
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Post by Financial Thing on Dec 31, 2015 17:25:24 GMT
Strange post. The SM is certainly available to you and to anyone else who wants to use it. Do I like the SM? Not really but that doesn't mean I don't use it. I use it frequently to sell pieces and to buy newly issued loans.
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ablender
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Post by ablender on Dec 31, 2015 19:39:35 GMT
I am not talking about liking or not liking. I am more referring about risk if you use it. In one way people will avoid paying their tax. In the other people can end up paying someone else tax. I do not want to be in either position. This means that the SM is not available for me. I want to have an SM where I feel free to participate without having to worry that in a year, two year or six year time HMRC will come knocking on my door.
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kaya
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Post by kaya on Dec 31, 2015 19:45:54 GMT
Don't worry! Be happy! It's only money after all.
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ben
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Post by ben on Dec 31, 2015 21:14:34 GMT
I am not talking about liking or not liking. I am more referring about risk if you use it. In one way people will avoid paying their tax. In the other people can end up paying someone else tax. I do not want to be in either position. This means that the SM is not available for me. I want to have an SM where I feel free to participate without having to worry that in a year, two year or six year time HMRC will come knocking on my door. All I do with it is sell, although to be fair even if it did work like MT I doubt I would use it much more
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LittleBear
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Post by LittleBear on Dec 31, 2015 21:59:54 GMT
I do kind of agree. Having lost money on the SM (loan repaid months early so I didn't recoup the slight premium I'd paid), I won't be buying anything again. My only use for it is to list most of my loans for a premium and hope they sell for a profit. If they don't, then I'm happy to hold them as I would have done anyway. Not exactly how I would like to be using an SM.
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Post by Financial Thing on Dec 31, 2015 22:20:13 GMT
I am not talking about liking or not liking. I am more referring about risk if you use it. In one way people will avoid paying their tax. In the other people can end up paying someone else tax. I do not want to be in either position. This means that the SM is not available for me. I want to have an SM where I feel free to participate without having to worry that in a year, two year or six year time HMRC will come knocking on my door. I understand what you are saying but I'm not seeing the whole "avoid paying tax" issue. I hate tax as much as the next man but if you start with £100 in your FS account and finish the year with £112, if you don't report the £12 gain, in my book that's tax evasion. I don't see how selling your loan piece makes this tax liability disappear.
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ablender
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Post by ablender on Dec 31, 2015 23:03:57 GMT
I am not talking about liking or not liking. I am more referring about risk if you use it. In one way people will avoid paying their tax. In the other people can end up paying someone else tax. I do not want to be in either position. This means that the SM is not available for me. I want to have an SM where I feel free to participate without having to worry that in a year, two year or six year time HMRC will come knocking on my door. I understand what you are saying but I'm not seeing the whole "avoid paying tax" issue. I hate tax as much as the next man but if you start with £100 in your FS account and finish the year with £112, if you don't report the £12 gain, in my book that's tax evasion. I don't see how selling your loan piece makes this tax liability disappear. I think you were not following the threads that relate with this issue.
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Post by Financial Thing on Jan 1, 2016 0:01:14 GMT
I understand what you are saying but I'm not seeing the whole "avoid paying tax" issue. I hate tax as much as the next man but if you start with £100 in your FS account and finish the year with £112, if you don't report the £12 gain, in my book that's tax evasion. I don't see how selling your loan piece makes this tax liability disappear. I think you were not following the threads that relate with this issue. I followed all the threads relating to this. Sometimes our thoughts can lead to terribly wrong assumptions regarding what we think we know and what we actually know.
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ben
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Post by ben on Jan 1, 2016 0:05:32 GMT
If it was a new loan I be more inclined to buy it then one of the older ones but would not pay a premium for one
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ablender
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Post by ablender on Jan 1, 2016 0:15:04 GMT
I think you were not following the threads that relate with this issue. I followed all the threads relating to this. Sometimes our thoughts can lead to terribly wrong assumptions regarding what we think we know and what we actually know. I contacted HMRC and they did confirm that what FS is saying is according to the rules. That is not what worries me. My worries are that there were stories (you might have followed them on the news) this year of people who were following the rules but the result was that they paid less tax then what HMRC was happy with and they ended up in trouble. I do not trust HMRC's position when they end up getting less tax. What the person on the phone said was that, yes it is according to the rules but P2P is a new field and things may change. I do not want to end up on the wrong side of such a change. After all it was a phone call not something in writing that I can show in court if challenged by HMRC. Due to this I do not feel I can use the SM and therefore it is not available to me.
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ben
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Post by ben on Jan 1, 2016 0:36:54 GMT
I followed all the threads relating to this. Sometimes our thoughts can lead to terribly wrong assumptions regarding what we think we know and what we actually know. I contacted HMRC and they did confirm that what FS is saying is according to the rules. That is not what worries me. My worries are that there were stories (you might have followed them on the news) this year of people who were following the rules but the result was that they paid less tax then what HMRC was happy with and they ended up in trouble. I do not trust HMRC's position when they end up getting less tax. What the person on the phone said was that, yes it is according to the rules but P2P is a new field and things may change. I do not want to end up on the wrong side of such a change. After all it was a phone call not something in writing that I can show in court if challenged by HMRC. Due to this I do not feel I can use the SM and therefore it is not available to me. true although what is the worst that will happen you have to pay more tax then you expected as long as long as when using the secondary market you take that in to account when selecting what to buy it should not be an issue, my problem with the secondary market is that you can buy something pay somebody interest for however many days then the next day they repay it and you lose out
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ablender
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Post by ablender on Jan 1, 2016 1:59:59 GMT
I contacted HMRC and they did confirm that what FS is saying is according to the rules. That is not what worries me. My worries are that there were stories (you might have followed them on the news) this year of people who were following the rules but the result was that they paid less tax then what HMRC was happy with and they ended up in trouble. I do not trust HMRC's position when they end up getting less tax. What the person on the phone said was that, yes it is according to the rules but P2P is a new field and things may change. I do not want to end up on the wrong side of such a change. After all it was a phone call not something in writing that I can show in court if challenged by HMRC. Due to this I do not feel I can use the SM and therefore it is not available to me. true although what is the worst that will happen you have to pay more tax then you expected as long as long as when using the secondary market you take that in to account when selecting what to buy it should not be an issue, my problem with the secondary market is that you can buy something pay somebody interest for however many days then the next day they repay it and you lose out Yes that is also true.
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duck
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Post by duck on Jan 1, 2016 8:06:31 GMT
I accept that you do not feel that the aftermarket is not 'available' for you ablender and that is obviously your decision.
What I cannot accept is that the aftermarket is generally unsuitable for purpose as appears to be the view of many of the posts on the forum.
Firstly the market complies with HMRC rules as they currently stand but as we all know HMRC can be rather opaque when pressed for a tablet of stone - my correspondence with them some years ago regarding Euro P2P investments being a prime example - so all you can do is go with the current guidance, the risk of HMRC changing their view is IMO the same for all platforms.
Yes the tax implications are 'interesting' but if you know what you are dealing with that should be part of the investment decision. It doesn't take much to add a couple of extra columns on a spread sheet to show exactly what the implications are.
Buying short (or even long term) term loans always run the risk of early repayment but the other side of the coin is that loans can be renewed. When this happens not only do you avoid the 'fastest finger' competition but that tax implication is quickly eaten up if you hold. Depending on your purchase price (and if you paid a premium or not) you can choose a time and price to sell and wipe out the previous accrued tax and still turn in a profit.
Yes you win on some and loose on others but my experience so far is that even buying at a small premium can be made to work if you have a clear strategy in place.
I accept this is not an approach that everybody wishes to adopt and it requires the market to remain active but in my view it is just requires a different mind set.
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pikestaff
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Post by pikestaff on Jan 1, 2016 9:52:59 GMT
I'm not on FS so I've not been following the tax discussion here, but this thread caught my eye. The tax position will be old news for anyone who invests on TC.
The consensus is that p2p loan parts are "simple debts", and not securities.
Individual taxpayers are taxed on their interest income on "simple debts" on a cash basis. Therefore if you sell a loan part pregnant with interest you escape the income tax liability, which falls on the buyer (assuming they also are an individual).
Companies are taxed on their income and gains on an accounts (accruals) basis, so the system as a whole will lose tax if a taxable individual sells a roll-up loan to a company (or to a non taxpayer). That's what happens when there are inconsistencies in the system. Nothing at all to worry about.
Also, UNLESS YOU ARE A TRADER (see below) any gain on sale of a NEW loan part is outside the scope of tax but so is any loss.
Gains and losses on the sale of second-hand loan parts ARE taxable/deductible, unless the platform has structured "sales" so that the buyer actually gets a new loan. To my knowledge, "sales" are so structured on FC and AC but not on TC. The ways FC and AC structure their sales also avoid the accrued interest problem. I think FS must be the same as TC in this respect, or else the accrued interest point would not arise. So, unless you are a trader, you will need to keep a record of which of your FS investments were bought new and which were second hand.
TRADERS are liable to income tax on their gains less losses on sale of all loan parts. The question of when an investor becomes a trader is a grey area. If HMRC wanted to go after an individual whose strategy involved selling their roll-up loans close to maturity in order to avoid the tax liability they could seek to argue that the individual was a trader and tax them on the gains. My personal view is that this would be a bit of a stretch but I'd prefer not to take the risk. However, I do believe that anyone whose investment strategy involves flipping their loans is a trader. And if you are a trader for part of your p2p portfolio, I think this makes you a trader for the whole. (Not so sure about this last point.)
I'd expect HMRC to go after any big flippers who do not declare their income. But if all you do is sell occasionally because you are worried about a loan, to rebalance your portfolio, or because you need the cash, you should not be considered a trader.
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