james
Posts: 2,205
Likes: 955
|
Post by james on Feb 19, 2016 23:56:02 GMT
james , can you explain to me why you think the Accrued Interest Scheme would apply to the sale of a loanpart on the Ablrate SM but not to the sale of a loanpart on the FS SM? Depends on how the particular deals are structured and I don't know what the specific contracts and structuring of FS that gives rise to the tax treatment they discuss is. Ablrate uses various structures and the treatment could even be different for different loan structurings at Ablrate, for example depending on whether like this loan there's a special purpose vehicle company in the middle. I also don't know how in the case where someone buys then sells some of a loan that is something that FS might say is still a simple debt, because that is contrary to what I understand from the HMRC definitions, because the buyer who is selling was not the original lender and that's the case that can be a simple debt. In both cases the buyer pays for the outstanding capital (adjusted for any premium or discount charged) plus an amount equivalent to the NOTIONAL interest accrued to the date of sale at the original headline rate. In both cases, no actual interest has been paid by the borrower at the time of the SM sale and there is no certainty that such interest ever will be paid (until it actually is, at the end of the loan term). Not so. The way Ablrate's contracts work is that the seller has the right to have the interest paid by the buyer at the time of the transaction. Nothing notional about it, the seller is entitled to the interest money and gets it. Similarly, the buyer has a right to the future interest even if it hasn't been paid yet. It's not solely speculative, it's a contractually enforceable right and the assets of the borrower are on the line if they don't pay it as scheduled. It's not something notional like one part of a company billing another part of the same company for rent but never actually doing any paying, the monies really are changing hands. Is Ablrate wrongly describing the payments as interest when they aren't? I'll punt to Ablrate's legal advisers and let them tell us all the answer for each type of loan structure involved, from the possibility of a loan directly to an individual to a structure like this one where the loan is to a company which lends the money to another company. What is clear is that consumers have been led to expect a certain treatment based on how Ablrate describes things. Magic regulatory words there in bold re Outcome 5 of the FCA's TCF guidance. FS have clearly gone to some lengths with their tax advisors to establish that HMRC treat such transactions as the sale of a Simple Debt and that the Accrued Interest Scheme is not applicable. They provide an explanation of this on their website. I assume that for the way they structure things they are right and have also done something to make the case of buyer who resells still be a simple debt, when the basic treatment is that it is not at that point still a simple debt. ablrateandy , are you able to clarify this with Ablrate's tax advisors? It seems critical that this be nailed down, else the tax statements provided by Ablrate to lenders at the end of the tax year may be incorrect / misleading in terms of the "Interest Earned" figure. Many thanks. Yes, I think that is the way to proceed, in part because I am far from sure that every loan structure used by Ablrate would be treated the same way with regard to whether they are or aren't a security vs simple debt or not. And I don't think that this is the only deal affected, so Ablrate really needs to go and get some definitive answers on this, for all secondary market transactions, not just those for this loan. If only because Ablrate has a legal obligation to make correct reports to HMRC and can't do that unless it knows the correct answers. I do know that there are some possible structures, like loans directly to an individual, that would start out a simple loans and be treated the way you described, if Ablrate made them. At least until the loan was bought on the secondary market then resold. (shrug) It's complicated enough that I think it really does require a pro to look at it and get definitive answers to the various cases, so that we can then rely on what Ablrate tells us Ablrate is telling HMRC about things in those reports that Ablrate has to make. And for this loan the issue is far more significant than it is for the many short loans that Ablrate has done. Of course most important for ablrateandy at the moment is forgetting this until Monday because he needs sleep. It'll keep.
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Feb 21, 2016 8:50:23 GMT
Another question if I may.... If a lender is in tranche b for example, does that exclude them from asking to be in later tranches?
|
|
|
Post by ablrateandy on Feb 21, 2016 9:07:17 GMT
Re tax - ablrate are taking a look and seeing what we can say. jonah No. It's going to be a case of squeezing people in where I can and doing my best to keep people happy, so best approach is to let me know what you want in total and your preference for tranches (and bear in mind that 90pc of my demand wants Tranche 1)!
|
|
|
Post by ablrateandy on Feb 21, 2016 9:08:47 GMT
Ie it is wise to reserve now because there is unlikely to be capacity when the tranches actually come to launch.
|
|
|
Post by ablrateandy on Feb 22, 2016 18:13:00 GMT
I'm now a long way over the 600k target so will be closing up shop pretty shortly and allocating people timeslots. We might squeeze it up a fraction, depending on whether we think we can deploy it well....
|
|
rogerbu
Member of DD Central
Posts: 398
Likes: 213
|
Post by rogerbu on Feb 22, 2016 19:14:50 GMT
ablrateandy I not aware that you ever answered the question on IFfy ISAs Are Ablerate planning to make their offerings available via an IFfy ISA (either direct of via UP or similar). If so, will the later tranches of this loan be able to slide into it?
|
|
|
Post by ablrateandy on Feb 22, 2016 19:22:17 GMT
Our current thinking is to utilise an umbrella scheme. I can't guarantee that this will be in place in time as it has a series of moving parts.
|
|
Steerpike
Member of DD Central
Posts: 1,959
Likes: 1,680
|
Post by Steerpike on Feb 27, 2016 20:16:08 GMT
This is an interesting project but I am not sure how much money I want to tie up for 5 years.
I note from the investor introduction that "the directors and shareholders will take no money out of the business" until sufficient cash has been generated to ensure that lenders are paid and clearly this is encouraging.
Perhaps I am being naive, or perhaps this question has already been answered, but it seems to me that it would be even more encouraging if lenders knew that the directors and shareholders have "skin in the game" in the form of their own investment, however, if this is the case I could not see where in the document this is confirmed.
|
|
jfm
Member of DD Central
Posts: 135
Likes: 67
|
Post by jfm on Feb 27, 2016 22:12:37 GMT
Keep up Steerpike, the boat sailed 5 days ago, presumably without you.
|
|
Steerpike
Member of DD Central
Posts: 1,959
Likes: 1,680
|
Post by Steerpike on Feb 28, 2016 8:43:23 GMT
Keep up Steerpike , the boat sailed 5 days ago, presumably without you. I had a look at this before I went on holiday but didn't make a decision and I only just remembered it, my understanding was that the closing date for pre-applications was today, as I said I have reservations anyway, so I'm happy to wish you bon voyage.
|
|
shimself
Member of DD Central
Posts: 2,560
Likes: 1,169
|
Post by shimself on Mar 1, 2016 14:45:41 GMT
Keep up Steerpike , the boat sailed 5 days ago, presumably without you. OK it has set sail, presumably with you in it, but aren't you interested in any holes under the waterline?
|
|
jfm
Member of DD Central
Posts: 135
Likes: 67
|
Post by jfm on Mar 25, 2016 15:29:32 GMT
Hi ablrateandy . You said you would call for funds 7 days before each tranche. Is the second one still on for 28 March? I don't think I got a mail. Thanks
Edit - just saw you answered in new thread by rogerbu
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Mar 26, 2016 19:29:23 GMT
Sorry haven't kept abreast of this and noticed new tranches were mentioned, are these fully funded or due to be available?
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Mar 26, 2016 20:46:14 GMT
All tranches have commitments from lenders to fully fund them, with the lenders having been told how much is expected of them and when. There is a backlog of people who have registered their interest if any becomes available. Don't expect to get any now but if you want to, look at the proposal document linked from the first post and use the email address and instructions given at the end.
The dates for each £100k tranche and cost per £100 of face value (so each person gets the same 15.44% AER equivalent final yield) are:
28 Feb 2016 £100.00 28 March 2016 £101.14 28 April 2016 £102.38 28 May 2016 £103.60 28 June 2016 £104.87 28 July 2016 £106.11
|
|
|
Post by ablrateandy on Mar 27, 2016 17:56:59 GMT
It is worth letting me know if you are interested... one person pulled out last time. Without telling me. And just ignored emails and calls about it. *mutter*
So I am always happy to divvy up unused amounts.
Just further to James's note above, the fairest way to do this was to give everyone the same AER no matter which tranche they came in on. The numbers in his post were based on a drawdown of the 28th march but as we are drawing on the 31st you need to put up £1,012.59 for every £1000 of face value, of which £18.39 is accrued interest and the capital is a slight discount (£994.20). This number will give you an AER of 15.4%, which will be standard across all tranches. It isn't quite as simple as simply adding accrued due to the interest rate compounding effect.
|
|