elliotn
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Post by elliotn on Apr 22, 2017 10:58:59 GMT
BTW who is going to track thousands of transactions on several hundred ISA A/C's? Who decides if the right price was paid? This is all such a grey area and no advice has been given by FS, causing utter confusion. Also, 95% of members won't be reading these boards so are even more clueless. I have a headache  ISA investment regs give a steer: 6. (3) Investments, or rights in respect of investments, may not at any time - (b) be purchased from - (i) an account investor, or (ii) the spouse or civil partner of an account investor, so as to become account investments under an account to which the account investor subscribes or has subscribed. I imagine it will be the ISA manager's responsibility and FS will have the IFISA purchase data to hand to interrogate.
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mason
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Post by mason on Apr 22, 2017 13:54:00 GMT
BTW who is going to track thousands of transactions on several hundred ISA A/C's? Who decides if the right price was paid? This is all such a grey area and no advice has been given by FS, causing utter confusion. Also, 95% of members won't be reading these boards so are even more clueless. I have a headache ISA investment regs give a steer: 6. (3) Investments, or rights in respect of investments, may not at any time - (b) be purchased from - (i) an account investor, or (ii) the spouse or civil partner of an account investor, so as to become account investments under an account to which the account investor subscribes or has subscribed. I imagine it will be the ISA manager's responsibility and FS will have the IFISA purchase data to hand to interrogate. Not really. This regulation appears to relate to purchase by the account manager as clarified earlier in the regulation. The corresponding HMRC guidance for ISA managers is: 10.5 Managers may not purchase investments from
- the investor, or
- the investor’s husband, wife or civil partner
so that they become investments in an ISA to which the investor subscribes or has subscribed.
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stub8535
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Post by stub8535 on Apr 23, 2017 10:37:04 GMT
It's a shame that you can't transfer loans into your IFISA because I am going to lose a lot of bonus interest  On selling, say, £20k on the SM any bonus is lost but if said amount is put in an [IF]ISA the tax saving is likely to top the loss in bonus. The gain will depend on the discount applied to achieve sale and how quickly it is redeployed within an [IF]ISA. Is my reasoning correct? Just leave the bonus bearing loans to go to term. Uncheck the renew box. Move the money and reinvest in other loans. Doing it this way you get your 2% and you can invest in a new loan that pays the same bonus inside your isa. Maximum wait should be 6 months although it can be considerably longer where the borrower is unable to meet their commitments. Dont forget that sm purchases do not get bonuses added to the rate.
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stub8535
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Post by stub8535 on Apr 23, 2017 10:47:13 GMT
Such a big change in sm habits since the ifisa was announced. Parts traded at par to .5% premium suddenly listing for silly discounts for moments b4 being snapped up.
Queue the bots with a little reprogramming.
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elliotn
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Post by elliotn on Apr 23, 2017 12:01:28 GMT
Such a big change in sm habits since the ifisa was announced. Parts traded at par to .5% premium suddenly listing for silly discounts for moments b4 being snapped up. Queue the bots with a little reprogramming. have the data for this internal sales activity and should take action accordingly.
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dzo
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Post by dzo on Apr 23, 2017 13:40:25 GMT
Such a big change in sm habits since the ifisa was announced. Parts traded at par to .5% premium suddenly listing for silly discounts for moments b4 being snapped up. Queue the bots with a little reprogramming. have the data for this internal sales activity and should take action accordingly. Agreed. The people doing this are being very silly - they'll be lucky if FS don't report them to HMRC.
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Liz
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Post by Liz on Apr 23, 2017 13:49:57 GMT
fundingsecure have the data for this internal sales activity and should take action accordingly. Agreed. The people doing this are being very silly - they'll be lucky if FS don't report them to HMRC. Aren't FS at fault for not telling members as ISA manager that they can't buy their own loans? FS could be in the sh*t here not members, who don't have contact with the FCA and can't be expected to know the ins and outs of ISA rules? You buy a S&S ISA of Cash and you follow the rules you are told, you don't go to HMRC to do intensive research to check your ISA manager is correct.Buying ones own loan parts at par or 4% pis the same crime. Buying ones own loan parts at par or 4% discount is the same crime as buying at 4% premium.
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dzo
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Post by dzo on Apr 23, 2017 13:57:50 GMT
Agreed. The people doing this are being very silly - they'll be lucky if FS don't report them to HMRC. Aren't FS at fault for not telling members as ISA manager that they can't buy their own loans? FS could be in the sh*t here not members, who don't have contact with the FCA and can't be expected to know the ins and outs of ISA rules? You buy a S&S ISA of Cash and you follow the rules you are told, you don't go to HMRC to do intensive research to check your ISA manager is correct.Buying ones own loan parts at par or 4% pis the same crime. Buying ones own loan parts at par or 4% discount is the same crime as buying at 4% premium. I'd say people who are blatantly gaming the system (e.g. cycling loan parts between accounts at -4% and +4%) know what they're doing and that it's not allowed. Having said that I'm surprised FS didn't just block people from buying their own loan parts to save themselves the trouble.
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Liz
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Post by Liz on Apr 23, 2017 13:59:56 GMT
I wished FS had just not allowed members to buy their own loans, it would have simplified things. Or if they agreed with HMRC that we could buy our loans, they should have said so. This could be one big mess.
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dzo
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Post by dzo on Apr 23, 2017 14:04:04 GMT
I wished FS had just not allowed members to buy their own loans, it would have simplified things. Or if they agreed with HMRC that we could buy our loans, they should have said so. This could be one big mess. I agree that if they have advice from HMRC saying its alright they should tell us. It surely can't be within the rules though because that would mean there's no longer any ISA contribution limit.
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Liz
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Post by Liz on Apr 23, 2017 14:07:53 GMT
Aren't FS at fault for not telling members as ISA manager that they can't buy their own loans? FS could be in the sh*t here not members, who don't have contact with the FCA and can't be expected to know the ins and outs of ISA rules? You buy a S&S ISA of Cash and you follow the rules you are told, you don't go to HMRC to do intensive research to check your ISA manager is correct.Buying ones own loan parts at par or 4% pis the same crime. Buying ones own loan parts at par or 4% discount is the same crime as buying at 4% premium. I'd say people who are blatantly gaming the system (e.g. cycling loan parts between accounts at -4% and +4%) know what they're doing and that it's not allowed. Having said that I'm surprised FS didn't just block people from buying their own loan parts to save themselves the trouble. The problem is FS haven't set out rules, so how do members know they are "gaming"? Like you said it is FS at fault here. If they know buying your own loans is wrong(i don't know if it is, I'm no expert), then they should have blocked sales. You can't penalise people when they follow FS's T&C's.
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dzo
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Post by dzo on Apr 23, 2017 14:16:50 GMT
fundingsecureCould you tell us what your understanding of this issue is? Is it ever okay to buy your own loan parts? Have you considered the possibility of people using this as a way to boost their ISA allowance?
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pikestaff
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Post by pikestaff on Apr 23, 2017 14:42:04 GMT
Bit more detail - FS may not allow you to renew to your tax free account if that is deemed sanctioning tax avoidance ie 6.14 (a) forbids acquiring investments from the investor ie yourself: 6.14 For any acquisition of investments in an ISA, the conditions that must be satisfied are as follows. (a) The investments must not be purchased from the investor, or from the investor’s spouse or civil partner. (b) The investments must be bought at the open market price (paragraph 10.7). Which terms are those? I don't recall seeing this when signing up for my ISA, although I might have missed it. The text doesn't appear to feature at all here: www.fundingsecure.com/terms-and-conditionsAs noted by SteveT in an earlier post, this text is taken from HMRC's guidance notes for iSA managers www.gov.uk/government/publications/guidance-notes-for-isa-managers. The underlying law is to be found in ISA Regulation 6: 6(1) All transactions by way of purchase ... shall be made ... (c) in the case of all other account investments, at the price for which those investments might reasonably be expected to be purchased in the open market.
6(3) Investments, or rights in respect of investments, may not at any time... (b) be purchased from— (i) an account investor, or (ii) the spouse of an account investor ...It's crystal clear that direct sales and purchases are not permitted. HMRC tolerates bed and ISA for shares because there is a genuine market price and there are two separate transactions with the market. Neither is likely to be the case for p2p secondary markets at their current state of development. If FS don't have coding to prohibit this they are asking for trouble.
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mason
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Post by mason on Apr 23, 2017 14:48:28 GMT
It would be useful to maintain some level of distinction between a number of different behaviours being discussed here that are of increasing levels of dubiousness. They seem to be, in increasing likelihood of being a problem:
1) Selecting a loan part to buy within your ISA that you have listed for sale in your non-ISA account, from a number of equivalent offers, either deliberately or inadvertently.
2) Buying a loan part within your ISA from your non-ISA account that was otherwise unavailable in the market.
3) Buying a loan part within your ISA at a significant discount so as to boost the monetary value of your ISA account.
4) Repeatedly trading loan parts between your ISA and non-ISA accounts at different prices so as to boost the monetary value of your ISA even more significantly.
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mason
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Post by mason on Apr 23, 2017 14:57:35 GMT
As noted by SteveT in an earlier post, this text is taken from HMRC's guidance notes for iSA managers www.gov.uk/government/publications/guidance-notes-for-isa-managers. The underlying law is to be found in ISA Regulation 6: 6(1) All transactions by way of purchase ... shall be made ... (c) in the case of all other account investments, at the price for which those investments might reasonably be expected to be purchased in the open market.
6(3) Investments, or rights in respect of investments, may not at any time... (b) be purchased from— (i) an account investor, or (ii) the spouse of an account investor ...It's crystal clear that direct sales and purchases are not permitted. HMRC tolerates bed and ISA for shares because there is a genuine market price and there are two separate transactions with the market. Neither is likely to be the case for p2p secondary markets at their current state of development. If FS don't have coding to prohibit this they are asking for trouble. As I mentioned a few posts earlier in this thread, the subject of that clause in the regulation is not specified within that part of the text, but using the context set earlier in the same regulation, it appears to be the account manager and not the investor. So, the ISA manager must not purchase investments from the investor such that they become investments within the ISA. This is made clearer in paragraph 10.5 of the ISA Guidance Notes, where the text is almost identical, but "Managers" is specified. From my own reading of both documents, I do not believe the situation with respect to direct purchases is addressed in either.
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