james
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Post by james on Nov 17, 2016 14:09:41 GMT
1. Peer-to-peer lending, including a Loan Part acquired through our structure is a simple debt, and as such, AIS relief would not apply as this only applies to a security. Lenders participating in primary auctions only and holding their Loan Parts to term would be considered original debt lenders, and it follows that they should report a total gross figure for interest received during the tax year. Just to be sure, is that based on the incorrect presumption that it's peer to per so it has to be a simple debt, or on the specifics of the agreements used at Relendex? Remember here that at least one P2P platform that has taken professional advice has concluded that even original contracts are actually securities so it's not as simple as P2P = simple debt. Simple debt is most likely, though, so all I'm asking in this paragraph is confirmation that the specifics of your agreements have been considered, rather than just the presmption. 2. However, it does look as though purchases and sales via a secondary market could potentially be liable to CGT. So strictly, if proceeds received were in excess of £44,400 for tax year 2015/16, then all such transactions should have been reported on their tax return. However, it is quite unlikely that HMRC would ask for this information, particularly if all trades are transacted at par, as is the case for our Resale Marketplace. Which could potentially be liable: A. a sale by a person who originally acquire the loan? This would be inconsistent with the assertion that the loans for those who participated at initial offer are simple debts, which are normally exempt from CGT. B. a sale by a person who acquired a loan via a secondary market? This would be consistent with the originally issued loans being simple debts and with them not being securities. I'm a little surprised that the matter of whether HMRC will ask for the information seems relevant, since it is a mandatory requirement to report all of the transactions related to any disposal (including the purchases) if CGT reporting of any transaction on any platform is required, regardless whether a loss or gain is made. 3. That said, our tax advisor takes the view that lenders wishing to offset the cost of purchasing a Loan Part with accrued interest can do so via peer-to-peer relief when such loan parts repay at par. This would require details of loans sold / repaid in the tax year to be matched to related purchases (including accrued interest). That's an interesting, novel argument. On what basis is the borrower required to pay the amount of accrued interest involved a second time to create the default by the borrower that leads to a loss that is irrecoverable without legal action against the borrower? There seems to be a complete absence of any grounds for such action since the borrower seems to have made all payments due by them. Our tax advisors point out that self-assessment reporting of peer-to-peer income and, particularly, peer-to-peer relief is new and there is little experience on which to reach define the filing obligation with certainty. Yes, I've only been required to report for seven years so far so it's relatively new, though the loss relief is newer than that. In fact, as you may be aware some of our peer platforms do not break down individual trades on annual tax statements, forcing lenders to take the only option of reporting gross income received. Yes, I'm aware of it and where relevant I've asked for additional reporting.
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Post by wengyeeRelendex on Nov 18, 2016 12:13:11 GMT
Thank you for your comments.
To clarify couple of matters raised in your commentary. No, it’s not a presumption as we believe our structure falls within the definition of simple debts and not securities. We further agree with you that a CGT reporting may arise from purchasing loan parts on the secondary market. With respect to such reporting being mandatory our observation, which agrees with your own experience, is that platforms are only now catching up on this, so many lenders, unless they've chased platforms for additional data, would have filed FY16 or earlier returns without CGT disclosure, but HMRC appears not to have pushed back on this so far. At least we have not heard otherwise.
Regardless, we intend to provide necessary data to our lenders engaged in secondary market activities. Lastly, our tax advisor expressed an opinion that it’s possible to claim a peer-to-peer tax relief on accrued interest as it is a loss for purchasing something above par and being paid back at par. Would any of our lenders take this advice or would HMRC then object? It’s difficult to foretell, but we are very likely to find out at the next tax reporting cycle. Based on advice received to date we are more certain that AIS would not apply.
Regards,
Relendex
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james
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Post by james on Nov 18, 2016 14:42:33 GMT
our tax advisor expressed an opinion that it’s possible to claim a peer-to-peer tax relief on accrued interest as it is a loss for purchasing something above par and being paid back at par. Would any of our lenders take this advice or would HMRC then object? It’s difficult to foretell, but we are very likely to find out at the next tax reporting cycle. Just what is meant by peer-to-peer tax relief? The one that first comes to mind is the relief for bad debts. And that one is specific to and only for bad debts. Merely having a loss is irrelevant unless there is a bad debt. So it can't be this one even though it's what came to mind first. The other possible way to have a deduction of some sort is via a CGT loss. This can happen if a higher price than par is paid via a secondary market deal, provided the secondary market is of the type that changes a loan from being a simple debt to no longer a simple debt, as appears from our description to be the case at Relendex. In this case, yes, the repayment at par by the borrower, or a sale in the secondary market at par, would produce a loss that is relevant for CGT. So to support this, Relendex would need to track the purchases and full or partial disposals and report on them so a person could first determine whether they have had disposals across all P2P over the threshold for reporting, then could work out their loss that would be allowable against other gains. So I assume that what's meant is the second one, but could you confirm that? Maybe also tweak terminology since just about everyone reading P2P tax relief would be thinking of the bad debt relief rather than the CGT relief that isn't specific to P2P, just generic CGT stuff. Getting quite close now to having everything pinned down sufficiently to understand all of the implications. Which will probably be a relief for you. 
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Post by jordan on Nov 21, 2016 18:45:43 GMT
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Post by wengyeeRelendex on Dec 1, 2016 11:44:22 GMT
wengyeeRelendex Apologies if I've missed it, but does the web site show any historical performance statistics? If not, are you able to provide any? Many thanks, Ian.. Hi Ian, No we don't have any performance statistics available on our website at the moment. It is something we are looking to get on there. - No defaults so far and all current loans are performing. But of course past performance is not a guide to future performance. - Investors received returns at an average rate of 8.3%. - £2,174,288 in capital repaid to investors to date. If there are any more specific numbers you are looking for then please do let me know. Kind regards, WengYee
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Post by wengyeeRelendex on Dec 12, 2016 15:51:18 GMT
Hi Ian, Yes we are always striving to bring the best loans to lenders on the platform . We were expecting to list a loan end of last week but our underwriter wants to quadruple check some items first so it is being delayed slightly. In the meantime, our secondary market has a couple of Loan Parts from past auctions available if that was of your interest? Regards, WengYee |
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