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Post by gusgorilla on Apr 5, 2016 14:32:50 GMT
When I generate tax statements they do not seem to show any (tax deductible) losses. andrewholgate this could get expensive for some people. Are you able to throw any light? What do suggest we do about this? Where can we see our losses please? |
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Post by mrclondon on Apr 5, 2016 22:57:18 GMT
What losses ?
I wasn't aware any AC loan has as yet been declared as written off. ( I accept a few of the currently distressed loans will eventually reach that state for at least part of the capital)
My understanding is that tax statements for 2015-16 for all p2p platforms will be similar to previous years and show written off losses. (The new rules for platforms commence tomorrow)
I've downloaded the statements for all the platforms I'm involved with (except TC) and losses shown are as I expected. FK did sent out an explanatory email yesterday.
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pikestaff
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Post by pikestaff on Apr 5, 2016 23:21:30 GMT
Automatic loss relief does not kick in until 2016/17. Platforms will have to report losses for 2016/17, in order to give the relief, but I am not aware that they will be under an obligation to do so for 2015/16. If anyone knows better, I'd be happy to be corrected. As you say, no AC loans have yet been written off. However, there are some which should qualify to be treated as irrecoverable in 2015/16. In my portfolio I'd put loans 35 (phones), 57 (optics) and 146 (plumber) in that category and I believe that I should be able to claim for all amounts as yet unrecovered. My only worry is that HMRC might say that 35 and 146 would have qualified to be treated as irrecoverable in the previous year. The implications of that are unclear, but I would then seek to argue that the "treated as" claim is permissive but not mandatory and I can still claim when the loans are definitively irrecoverable - ie, whenever AC writes them off.
Having gone back to the legislation I have changed my view on this and now fear that, at least in principle, all we can get for these loans is a capital loss claim under the old rules. See dark red edits in this post: p2pindependentforum.com/post/104652/thread |
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Post by profunder on Apr 5, 2016 23:50:55 GMT
Automatic loss relief does not kick in until 2016/17. Platforms will have to report losses for 2016/17, in order to give the relief, but I am not aware that they will be under an obligation to do so for 2015/16. If anyone knows better, I'd be happy to be corrected. As you say, no AC loans have yet been written off. However, there are some which should qualify to be treated as irrecoverable in 2015/16. In my portfolio I'd put loans 35 (phones), 57 (optics) and 146 (plumber) in that category and I believe that I should be able to claim for all amounts as yet unrecovered. My only worry is that HMRC might say that 35 and 146 would have qualified to be treated as irrecoverable in the previous year. The implications of that are unclear, but I would then seek to argue that the "treated as" claim is permissive but not mandatory and I can still claim when the loans are definitively irrecoverable - ie, whenever AC writes them off. How to make a claim Are there any time limits? After the loan has become irrecoverable there is no time limit in which to make the claim. Source: www.gov.uk/government/uploads/system/uploads/attachment_data/file/323727/hs296.pdf
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ilmoro
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Post by ilmoro on Apr 6, 2016 0:27:32 GMT
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Post by mrclondon on Apr 6, 2016 1:34:45 GMT
Keeping records for this is going to be an absolute nightmare, especially if platforms don't provide a clear list of loans that could be treated as irrecoverable 6th April 2015 - 5th April 2016.
I've had a quick trawl through the AC distressed loans, and noted the date that administrators were appointed over the borrower or an LPA was appointed to recover the security. This date (please double check I've not made any mistakes) could be a useful proxy for when the loan could be treated as unrecoverable. There are other arbitrary dates that could be chosen, I know, but this seems to have a degree of consistency to it. Thoughts, particularly from those that have studied the tax guidance, would be most welcome.
2015-16 --------- Scottish Inv Prop - Scottish Administrator Appointed March 2016 J.R**** - Administrators appointed 5th August 2015 Epping - LPA Receiver appointed 17th April 2015 Optical - Administrators appointed 14th April 2015 Wood**** - LPA Receivers appointed 15th April 2015 according to lender vote details on Survey Monkey 13/4/16
2014-15 ---------- Wood**** - LPA Receivers appointed sometime 17th March to 2nd April 2015
Anglesey - LPA Receiver appointed 23rd March 2015 Plumber - Administrators appointed 2nd February 2015 Ipswich - LPA Receiver appointed 19th Jan 2015 phones - Administrators appointed 24th October 2014
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duck
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Post by duck on Apr 6, 2016 5:27:36 GMT
.... However, there are some which should qualify to be treated as irrecoverable in 2015/16. In my portfolio I'd put loans 35 (phones), 57 (optics) and 146 (plumber) in that category and I believe that I should be able to claim for all amounts as yet unrecovered. My only worry is that HMRC might say that 35 and 146 would have qualified to be treated as irrecoverable in the previous year. The implications of that are unclear, but I would then seek to argue that the "treated as" claim is permissive but not mandatory and I can still claim when the loans are definitively irrecoverable - ie, whenever AC writes them off. I am going through a similar exercise with my Bondora loans (where +30% default is the norm  ) .... The Bondora recovery process has changed several times in the last year(s) so making this judgement call is difficult. My current approach is to take 'level 2' which should mean that court proceedings and bailiffs have been actioned (this information is no longer visible to users) . Then I am taking the last payment date and checking that no payment has been made for a calendar year (loss in 2014/15). If these criteria (made up by me) are fulfilled I will be claiming the outstanding capital. This is I believe a reasonable approach. Whilst this approach in detail is not appropriate for the AC loans (I'm in 57 & 146) I feel that a similar approach is not inappropriate. Obviously record keeping is of upmost importance in order that adjustments can be made in future tax years if any further recovery is made. I agree with your list above mrclondon (note, I haven't checked the dates but have no reason to dispute them!)
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pikestaff
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Post by pikestaff on Apr 6, 2016 5:58:44 GMT
profunder - The document you've linked to is relevant to claims for capital losses under the old rules, which applied until 5/4/2015 and will still apply for the 2015/16 tax year if (and only if) you do not elect to claim losses against income tax under the new rules. From 6/4/2016 the new rules will be mandatory. ilmoro - Thank you. The page you've linked to includes a link through to the detailed HMRC guidance but unfortunately not to the Finance Bill itself. I will add it to my first post on the stickied bad debt relief thread p2pindependentforum.com/post/104592/threadmrclondon - I would agree with that approach as a practical expedient to identifying the date on which loans qualify for the "treated as" relief. As I've noted both above and on the sticked thread, it is not clear what the consequences are where loans became eligible for that relief prior to 5/4/2015. I think my earlier comments on that subject may not have been correct and I will come back to this when I've thought about it a bit more. [See edit below.] Should this discussion be on the stickied thread?
Edit: Having gone back to the legislation I now fear that, at least in principle, all we can get for these loans is a capital loss claim under the old rules. See dark red edits in this post: p2pindependentforum.com/post/104652/thread
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SteveT
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Post by SteveT on Apr 6, 2016 7:17:53 GMT
I don't think that people filling out a personal tax return get to choose when a loan becomes irrecoverable. Personal taxation is not done on a "accruals" basis. Until AC write it off, relief cannot be claimed. Recently, TC partially wrote off a loan just before 5th April so that it could be "claimed on the tax return". (How helpful) The HMRC guidance is clear that is not correct. If a company has entered bankruptcy / liquidation and stopped paying then the loan may be treated as irrecoverable, disregarding any security that stands behind it. From 2016/17 forwards, platforms will be expected to decide this for themselves but for 2015/16 it is down to us to do so.
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SteveT
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Post by SteveT on Apr 6, 2016 8:01:51 GMT
The HMRC guidance is clear that is not correct. If a company has entered bankruptcy / liquidation and stopped paying then the loan may be treated as irrecoverable, disregarding any security that stands behind it. From 2016/17 forwards, platforms will be expected to decide this for themselves but for 2015/16 it is down to us to do so. For 2015/16, Are you talking about capital gains and tax? I'm talking about putting written off loans against interest. Against interest. See the sticky "Bad Debt Relief" thread on the General Discussion board
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pikestaff
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Post by pikestaff on Apr 7, 2016 6:39:40 GMT
...If a company has entered bankruptcy / liquidation and stopped paying then the loan may be treated as irrecoverable, disregarding any security that stands behind it... Not quite. The law says you disregard the exercise of the security (eg a charge or guarantee), not the underlying asset(s). This may give a different answer in some cases. I've commented on this point in the stickied thread.
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SteveT
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Post by SteveT on Apr 7, 2016 6:51:31 GMT
Thanks for the clarification. I was simply paraphrasing the HMRC guidance (presumably written for non-lawyers!):
"Loans with security
When loans are made against security, a loan may be treated as becoming irrecoverable as if the security did not exist."
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pikestaff
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Post by pikestaff on Apr 7, 2016 8:41:47 GMT
Keeping records for this is going to be an absolute nightmare, especially if platforms don't provide a clear list of loans that could be treated as irrecoverable 6th April 2015 - 5th April 2016.
I've had a quick trawl through the AC distressed loans, and noted the date that administrators were appointed over the borrower or an LPA was appointed to recover the security. This date (please double check I've not made any mistakes) could be a useful proxy for when the loan could be treated as unrecoverable. There are other arbitrary dates that could be chosen, I know, but this seems to have a degree of consistency to it. Thoughts, particularly from those that have studied the tax guidance, would be most welcome.
<snip by mod as original list has since been edited> The more I think about this the harder it gets. There is only one test under the law. When, if at all, did the loan become "irrecoverable other than by legal proceedings or by the exercise of any right granted by way of security for the loan"? Many of the AC loans now in recovery are underpinned by property. Does the fact that they are in recovery mean that they meet the definition? Arguably not, because there must have been at least some prospect of recovery without taking those steps. I'm in Wood**** and had not been planning to make a loss claim for that one (even if it were right side of the 6 April 2015 cutoff) unless and until there is a real loss - which I do not expect. If placing a loan in recovery is not in and of itself sufficient evidence that a loan meets the definition, it opens up the possibility of debate as to when the definition was met, even for the non-property loans. But I think it's pretty clear that the plumber and phones became irrecoverable (under the definition) before the 6 April 2015 cutoff.
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sqh
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Post by sqh on Apr 7, 2016 11:13:18 GMT
I believe that all AC loans have a PG as last resort. Therefore, anticipation of recovery remains until either:
(i) a deal is signed by the lenders relieving the borrower of outstanding debt.
or
(ii) a borrower is made bankrupt, and the Courts relinquish the borrower from any future liability for their outstanding debts.
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pikestaff
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Post by pikestaff on Apr 7, 2016 11:21:59 GMT
I believe that all AC loans have a PG as last resort. Therefore, anticipation of recovery remains until either: (i) a deal is signed by the lenders relieving the borrower of outstanding debt. or (ii) a borrower is made bankrupt, and the Courts relinquish the borrower from any future liability for their outstanding debts. The PG is outside the legal entity being lent to. If the only remaining means of recovery is via the guarantee, the loan is irrecoverable as defined in the legislation: "irrecoverable other than by legal proceedings or by the exercise of any right granted by way of security for the loan".
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) .... The Bondora recovery process has changed several times in the last year(s) so making this judgement call is difficult. My current approach is to take 'level 2' which should mean that court proceedings and bailiffs have been actioned (this information is no longer visible to users) . Then I am taking the last payment date and checking that no payment has been made for a calendar year (loss in 2014/15). If these criteria (made up by me) are fulfilled I will be claiming the outstanding capital. This is I believe a reasonable approach.
