bg
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Post by bg on Oct 15, 2016 11:14:55 GMT
Does anyone know if the Plumber loan is now deemed irrecoverable by AC (we all know it is but it just seems to be hanging there so as not to officially crystallise the loss)?
Looking at the government guidelines online:-
"Whether a loan has become irrecoverable should be judged on a case by case basis, however as the
loan will be managed by a platform, the platform would usually be in a position to determine when a
loan has become irrecoverable. The platform would then inform the lender that the loan had
become irrecoverable.
"If the platform does not undertake this action, then the lender may still determine that the loan has
become irrecoverable. However it will be the responsibility of the lender to show that there is no
reasonable prospect of the recovery of the loan and it is NOT simply a case of late payment."
For me there is no further prospect of recovery so I am inclined to write this off as a loss for tax purposes.
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oldgrumpy
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Post by oldgrumpy on Oct 15, 2016 12:35:10 GMT
I am leaving this off my 2015-2016 tax returns. I will put it on 2016-2017 because I prefer the simplicity of my returns being as close to platform figures given to HMRC as possible.... or will HMRC bleat, "oh, no! That loss occurred before the P2P losses were allowable against tax".
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pikestaff
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Post by pikestaff on Oct 15, 2016 14:20:04 GMT
I am surprised that AC have yet to write this off. However, the plumber went into administration in Feb 15 which is before the cutoff for income tax relief. See my post here p2pindependentforum.com/post/104652/thread and this very clear post from FundingKnight, with which I agree p2pindependentforum.com/post/107646/thread. I will claim a capital loss when it is written off by the platform, just in case I can use it one day. Capital losses can be carried forward indefinitely. |
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mikes1531
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Post by mikes1531 on Oct 15, 2016 15:06:23 GMT
Does anyone know if the Plumber loan is now deemed irrecoverable by AC (we all know it is but it just seems to be hanging there so as not to officially crystallise the loss)? In AC's last update for this loan (18/Aug) they reported the closing of the administration and their efforts with respect to the PGs. They ended the update with "We will provide a further update by close of business Thursday 27 October 2016."
We can hope the next update will clarify the situation.
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duck
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Post by duck on Oct 15, 2016 16:27:09 GMT
I have claimed it as a loss in my business accounts that ran to the end of Sept.
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mikeb
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Post by mikeb on Oct 15, 2016 18:03:28 GMT
Surely you can't legally say this is a loss, when the platform have not yet acknowledged it as a loss? Practically: Yes, it probably is a lost cause, but while "recovery efforts continue", it's not an HMRC-approved-copper-bottomed-loss.  Note: It will be the responsibility of the lender to make this call -- which is hard if you don't know exactly what is happening behind the scenes. |
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bg
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Post by bg on Oct 15, 2016 19:21:35 GMT
I am surprised that AC have yet to write this off. However, the plumber went into administration in Feb 15 which is before the cutoff for income tax relief. Yes but we received recoveries through the 2015/16 tax year and in my view it became clear during 2015/16 that there is no reasonable prospect of further recovery (which are the guidelines). I don't think the date of administration is relevant. On this basis I'm writing this off against income tax in 2015/16.
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bg
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Post by bg on Oct 15, 2016 19:27:44 GMT
Surely you can't legally say this is a loss, when the platform have not yet acknowledged it as a loss? Practically: Yes, it probably is a lost cause, but while "recovery efforts continue", it's not an HMRC-approved-copper-bottomed-loss. Note: It will be the responsibility of the lender to make this call -- which is hard if you don't know exactly what is happening behind the scenes. Per AC's latest update, the administrators have confirmed there are no further distributions to be made to creditors. Furthermore the guarantors have also confirmed thy can't pay their creditors. I interpret this as there being "no reasonable prospect of the recovery of the loan and it is NOT simply a case of late payment"
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pikestaff
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Post by pikestaff on Oct 16, 2016 6:31:26 GMT
I have claimed it as a loss in my business accounts that ran to the end of Sept. That would be right, but the tax rules for business are different as you know. Accrual accounting with a provision for losses in accordance with GAAP (generally accepted accounting practice).
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pikestaff
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Post by pikestaff on Oct 16, 2016 6:44:34 GMT
I am surprised that AC have yet to write this off. However, the plumber went into administration in Feb 15 which is before the cutoff for income tax relief. Yes but we received recoveries through the 2015/16 tax year and in my view it became clear during 2015/16 that there is no reasonable prospect of further recovery (which are the guidelines). I don't think the date of administration is relevant. On this basis I'm writing this off against income tax in 2015/16. For the purpose of income tax relief, 'irrecoverable' means irrecoverable other than by legal proceedings or by the exercise of any right granted by way of security for the loan. That condition was met when the loan went into administration, which was prior to 6 April 2015. Consequently, income tax relief is not available. The Funding Knight post that I linked to above is consistent with my interpretation and appears to be based on HMRC advice.
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Post by andrewholgate on Oct 17, 2016 9:22:51 GMT
There is a catch 22 here. There are a number of creditors owed money and the only way to do this is make the guarantors bankrupt. There is a cost for doing this and realisations will be low, so everyone is waiting for another creditor to go first so they can jump on the wagon.
We can't force lenders to pay for the bankruptcy and because realisations are low I can't advocate AC paying for this with a hope of recovery. I am looking at options as to what to do but a vote looks likely.
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bg
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Post by bg on Oct 17, 2016 11:52:37 GMT
Yes but we received recoveries through the 2015/16 tax year and in my view it became clear during 2015/16 that there is no reasonable prospect of further recovery (which are the guidelines). I don't think the date of administration is relevant. On this basis I'm writing this off against income tax in 2015/16. For the purpose of income tax relief, 'irrecoverable' means irrecoverable other than by legal proceedings or by the exercise of any right granted by way of security for the loan. That condition was met when the loan went into administration, which was prior to 6 April 2015. Consequently, income tax relief is not available. The Funding Knight post that I linked to above is consistent with my interpretation and appears to be based on HMRC advice. Going into administration does not mean a loan is irrecoverable. Plenty of companies have gone into administration and repaid loans (and even continued trading). It only became obviously irrecoverable to me during 2015/16 through information posted on the loan. I'm writing it off against income tax in 2015/16 and at worst I would think HMRC could just ask me to write off against capital instead (although the chances of them doing that are extremely remote). They're hardly going to fine me over something that is such a grey area (but yes the 45% tax relief is much more appealing than 28%!).
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pikestaff
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Post by pikestaff on Oct 17, 2016 16:36:42 GMT
...Going into administration does not mean a loan is irrecoverable... Indeed it does not. What you have missed is that for income tax purposes the relief is triggered when (if I summarise from the guidance rather than the law) the loan is either irrecoverable (which is what you are focusing on) or treated as irrecoverable. As the guidance explains, a loan is treated as irrecoverable for income tax purposes when an insolvency event such as administration occurs. Subsequent recoveries are added back when they occur. This is a consequence of the statutory definition which I cited in my earlier post: 'irrecoverable' means 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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duck
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Post by duck on Oct 19, 2016 6:32:46 GMT
...... the loan is either irrecoverable (which is what you are focusing on) or treated as irrecoverable. ..... Those bolded words have been haunting me for a year now when working through my tax returns. I'm tempted to request them on my grave stone ............ 
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Post by crabbyoldgit on Oct 19, 2016 7:06:59 GMT
So far my wife has incured no losses ,nor in the immediate future hopefully likley to. .However that evil day must come,as a non tax payer she can not recover any part of any loss.Is there any way i can claim against my tax,self employed, or will she just have to roll up the numbers until in some distant time she incures a tax bill and can reclaim.What records will we need to keep,she is self emplyed in her own right but under the income limit and submiting an annual short tax return.I am shure others must be in a similar position on the site, any info gratefully recieved.
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