The Anonymous Widower

Zopa and Bad Debts

I’ve got one bad debt on Zopa and when calculating my returns I do not count it in any way at all.  It might be recovered and more likely, I would be able to claim it against tax.

But HMRC are not being very helpful, as this post in the news on the Zopa site shows.

As those of you who follow our discussion forum will know, we are in conversations with the government about the tax treatment of lenders’ losses at Zopa. We had thought that lenders would be able to offset their losses from bad debt, as well as their Zopa fees, against their interest income from lending at Zopa. In that event the figure lenders would use in their tax return would be the ‘Total’ figure on the Zopa income statement.

However, HMRC advised us last year that they didn’t believe the losses could be offset, only the Zopa fees. That would mean that lenders should subtract the Zopa fees from the total of borrower and holding account interest and loan subsidy, but ignore the bad debt figure for the purpose of their 2008/09 tax returns.

We don’t believe this interpretation is remotely fair and have been lobbying the Government and Treasury accordingly. We are in continuing and constructive conversations with the Treasury and are hopeful that they will find a reasonable solution for the growing peer-to-peer lending industry in this country on the bases that 1) it will be fair in comparison with other lenders and 2) innovation in financial services is in everyone’s interest in these difficult times.

I’ve had various runs-in with HMRC in the past and tend to agree with the news. I should say that I’ve won most of these in the past.

We shall see!

July 9, 2009 - Posted by AnonW | Business, Finance | Banks, Zopa