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Post by dualinvestor on Apr 15, 2016 10:24:10 GMT
I would have thought people on the "retail" sites, like RS or Zopa, are unlikely, because of the size exemption, to be too much affected by this reporting requirement unless they are lending as businesses, in which case they should take advice from their accountants. Those that are on the higher value sites where the trading of debt is common should perhaps get themselves an accountant or at least talk to one so as to be aware of all of the taxation implications and the record keeping, if any, required due to their own particular circumstances.
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james
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Post by james on Apr 15, 2016 19:48:26 GMT
bigfoot12 - Sorry, you are right. Per the HMRC manual www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg53405:All debts are assets for Capital Gains Tax purposes - TCGA92/S21 (1). The satisfaction of a debt - by a repayment, or otherwise - is a disposal of the debt. If a debt is repaid in part, there is a part disposal, TCGA92/S251 (2)... Which means those of us who acquire p2p loans in the secondary market, on those platforms where the acquired loans are in legal form second-hand, need to make sure our aggregate disposals of all chargeable assets INCLUDING amortisation/repayment are kept below £44.4k in the tax year, otherwise we shall have some very painful reporting to do. At least repayments on simple debts meaning those not purchased on a secondary market, or purchased on a market that issues new debts, doesn't count for this because simple debts are not chargeable assets. Does mean that we need clear descriptions in tax pages and perhaps statements from all platforms though.
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Post by solicitorious on Apr 15, 2016 20:18:52 GMT
I've asked the question elsewhere...
What exactly can/will HMRC do for failure to report transactions which - while they ought, strictly-speaking, to be reported - give no rise to a tax liability?
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bigfoot12
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Post by bigfoot12 on Apr 15, 2016 23:34:00 GMT
I've asked the question elsewhere... What exactly can/will HMRC do for failure to report transactions which - while they ought, strictly-speaking, to be reported - give no rise to a tax liability? I'm sure that if you are a regular tax payer who has made a genuine mistake they will threaten you with gaol and charge you a huge fine (tax return is late so £100 per day), but if you are a large player with money in Panama they will offer you a deal in which you agree to pay 25% of what you owe without a fuss!
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pikestaff
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Post by pikestaff on Apr 16, 2016 8:02:08 GMT
I've asked the question elsewhere... What exactly can/will HMRC do for failure to report transactions which - while they ought, strictly-speaking, to be reported - give no rise to a tax liability? I think they are most unlikely to do anything, especially where most of the "disposals" result from amortisation or repayment. Though it might make life worse if you were investigated for something else. As I said in my first post on this thread, if I were HMRC I would prioritise going after undeclared traders. Some traders are making serious money from the SM. The platforms will have the data to know who their traders are, but I don't know whether HMRC has the right to demand it.
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Post by dualinvestor on Apr 16, 2016 8:20:48 GMT
I've asked the question elsewhere... What exactly can/will HMRC do for failure to report transactions which - while they ought, strictly-speaking, to be reported - give no rise to a tax liability? HMRC have a wide range of powers from automatic fines (£100 for the FIRST day and £10 per day if the return has not been filed after 90 days, up to a maximum of £1,000), interest and surcharges, to court/tribunal procedings. The number of people criminally proscecuted is infintesimally small. In practical terms if you find you have made an error tell the tax office and in most cases they will just accept the extra tax due probably with interest. If however they find out from a third party that you have failed to declare income or gains their reaction could be harsher with the addition of penalties (which can, in certain circumstance, be 200% of the tax you should have paid. Some organisations, banks, building societies, investment funds etc automatically report certain information to HMRC, whether this extends to P2P lending platforms I don't know.
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james
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Post by james on Apr 16, 2016 8:27:13 GMT
Some organisations, banks, building societies, investment funds etc automatically report certain information to HMRC, whether this extends to P2P lending platforms I don't know. At least two platforms have been asked for data from HMRC, Zopa first mentioning it some years ago, one that was asked about it recently provided amounts and names etc. to HMRC.
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stevio
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Post by stevio on Apr 19, 2016 19:06:06 GMT
Seems investors don't know what to report, platforms don't want to take responsibility for what to report.
I would class us participating on these forums as the more 'informed' investors. There must be thousands of other investors who have no clue about this. Not reporting correctly, your not going to be lonely!
Can't imagine HMRC are going to want to investigate thousands of accounts for most likely a small amount of tax, when there is easier to detect and juicer prey in traditional tax evasion
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locutus
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Post by locutus on Apr 21, 2016 9:48:10 GMT
Can we get some definitions of the terms used in this thread? How are "simple debts" and "chargeable assets" actually defined?
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pom
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Post by pom on Apr 21, 2016 11:24:08 GMT
Can we get some definitions of the terms used in this thread? How are "simple debts" and "chargeable assets" actually defined? Suggest you read the links on the first post
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pikestaff
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Post by pikestaff on Apr 21, 2016 16:42:41 GMT
Can we get some definitions of the terms used in this thread? How are "simple debts" and "chargeable assets" actually defined? Suggest you read the links on the first post ..although they won't help very much on the distinction between a "simple debt" and a "security". The interpretation of the statutory definition of a "security" is not at all straightforward, and at the end of the day it comes down to case law and HMRC's interpretation of it. However, the consensus seems to be that regular p2p loan parts are simple debts. I think this is probably because they can be repaid at short notice without penalty. FC's FAQ on tax used to say specifically that their loan parts are simple debts, but without saying why.
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david42
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Post by david42 on May 1, 2016 13:54:19 GMT
Some organisations, banks, building societies, investment funds etc automatically report certain information to HMRC, whether this extends to P2P lending platforms I don't know. At least two platforms have been asked for data from HMRC, Zopa first mentioning it some years ago, one that was asked about it recently provided amounts and names etc. to HMRC. Ablrate recently said HMRC had asked for details of interest payments from borrowers broken down by lender: p2pindependentforum.com/post/108246/thread
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james
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Post by james on May 25, 2016 7:29:16 GMT
I've updated the second post with a summary of the Ablrate situation now the advice from their accountant is available. Loans are securities fully subject to CGT and covered by the Accrued Interest Scheme so: 1. Secondary market profits and losses are subject to CGT. 2. Repayments by the borrower either in monthly payments or at the end can create a capital loss or gain. 3. Instant returns are a discount to the purchase price, not interest, include them in your CGT calculations. 4. Accrued interest is accountable to the seller at the time of sale and taxed as interest as usual. To the buyer the accrued interest which they pay should be deducted from the interest received from the borrower. |
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Post by meledor on May 25, 2016 8:02:52 GMT
It is perhaps worth pointing out that the advice from Ablrate's accountants was heavily caveated. I also raised a question about treating instant returns as a capital gain on the Ablrate board that no one was able to answer. The question is this: when instant returns are paid by Ablrate but the loan does not go ahead how can the instant returns be a deduction from the purchase price of a non-existent loan? And what were the loan disposal proceeds when the loan was never drawn down?
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stevio
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Post by stevio on May 28, 2016 8:52:08 GMT
I've updated the second post with a summary of the Ablrate situation now the advice from their accountant is available. Loans are securities fully subject to CGT and covered by the Accrued Interest Scheme so: 1. Secondary market profits and losses are subject to CGT. 2. Repayments by the borrower either in monthly payments or at the end can create a capital loss or gain. 3. Instant returns are a discount to the purchase price, not interest, include them in your CGT calculations. 4. Accrued interest is accountable to the seller at the time of sale and taxed as interest as usual. To the buyer the accrued interest which they pay should be deducted from the interest received from the borrower. This is quite different from how FS treat Accrued Interest and and Secondary Market premiums/discounts and Interest from the loan
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