Add your voice to our tax campaign

Bruce Davis

Posted on October 21st, 2009 at 5:59 pm

Inadvertently, fighting zopa’s corner got my knuckles rapped by the mods on the bbc (aren’t they guys in leather jackets and chromed up mopeds?)- should have declared my interest. My own fault for posting after a whisky tasting session in the name of ethnographic insight!

Danvers Baillieu

Posted on October 27th, 2009 at 9:21 am

Just caught up with this post rather late and now the thread on the BBC site has moved on.

I would be very interested in understanding more about the tax position. Under general tax principles, if lending on Zopa was “in the course of business” then it would make sense that losses could be off set against profit. If lending is done “in the course of business” then a consumer credit licence is required. You (i.e. Zopa) say a consumer credit licence is required if more than £20,000 is being lent out. I am not sure of the basis for that. The last time I looked I could not find a specific provision in the legislation that made £20,000 the threshold (there used to be one, but it was abolished). However, £20,000 seems a reasonable cut-off for “amateur” lenders.

On the other hand, there is nothing to stop someone lending £5000 from apply for a licence and declare that they are running a business.

In those circumstances, the HMRC might be open to challenge in the courts if they did not allow a “business” to off set the losses against profits on Zopa.

On the other hand, if individuals could off set “losses” from “profit” made on Zopa, there would be an argument that “losses” would include interest paid out - currently it is not possible to do that in respect of interest paid on a mortgage vs interest received on a savings account - so the banks could justifiably complain.

I support the principle of what you are trying to do, but it could be more complicated than you think to implement.