A GROUP of P2P firms are set to present HMRC with a list of Innovative Finance ISA (IFISA) concerns, Peer2Peer Finance News has learned.
ThinCats, Goji and TISA are among the companies which have come together to raise issues around IFISA administration, including how to deal with ISA repairs, deaths, defaults, and the definition of ‘peer to peer finance’ itself.
It is hoped that by raising these issues now, UK-based P2P platforms can avoid costly fines and retroactive taxation after the current tax year.
Already this year has seen a plethora of IFISA approvals from HMRC, leading to record-breaking investments on IFISA-ready platforms. However, a lack of clarity around IFISA administration could place some of these investments in jeopardy.
One of the key concerns is how P2P platforms would be expected to handle IFISA repairs. These happen when an investor has placed too much money into their ISA account in a tax year, and has to remove a portion. While this is easily done when dealing with a cash ISA or stocks and shares ISA, it could become complex for IFISA users who have invested across a range of part loans.
“Imagine that someone has inadvertently opened too many ISAs in a year and the Inland Revenue writes to one of the providers and says to advise them of this,” said Stuart Caley, finance administration officer at ThinCats. “At the moment, the rules have been made for stocks and shares and cash ISAs. There are a few ways to remove that money. You can either track the most recent investments and divest it. But it might have already been invested across a lot of different loans. So how do you deal with that?
“If you’ve got loan parts it would probably be more sensible to provide a way to remove a few whole parts rather…