London Capital and Finance

Jelli

Yeah, I've just listened to it now. I need a teddy bear to cuddle as I'm not a rich person despite investing thousands which I got from forfeiting life. I'm on 12k a year so not a high income person by any stretch.

I didn't mind lending to small-to-medium businesses and the risk that involved, but only if they existed. There was nothing on the website that said your capital could be at risk if it was all a lie.

Alexland

Really sorry to hear that Jelli. I don't hold out much hope that you will get the money back but fingers crossed.

masonic

jimjames wrote: »

Can you dissolve a company that has debts outstanding? Is it reliant on the lender to object which LCF might not do if they have the same directors? Maybe someone can shed some light on it?

Just read this:

So if your company is in trouble, simply move all assets to a place of safe keeping and let Companies House strike the company off. No-one is then going to ask you what happened to the assets! All debts disappear.
http://www.cheapaccounting.co.uk/blog/index.php/how-you-can-legally-get-away-with-not-paying-corporation-tax/

From my experience in the P2P lending realm I've seen platforms get quite agitated by strike off notices and it can trigger them to enforce their charge before it is too late.

Jelli

Thinking about it a bit more maybe the reason why FCA has frozen all account activity of LCF beyond the promotional side is the ISA product. If the ISA isn't really an ISA then LCF is affectively giving people tax-free interest when they shouldn't. With their mini bonds they deduct tax before paying interest but not with their ISA product.

If the ISA isn't an ISA and HMRC isn't getting their due tax then... yikes.

masonic

Jelli wrote: »

Thinking about it a bit more maybe the reason why FCA has frozen all account activity of LCF beyond the promotional side is the ISA product. If the ISA isn't really an ISA then LCF is affectively giving people tax-free interest when they shouldn't. With their mini bonds they deduct tax before paying interest but not with their ISA product.

If the ISA isn't an ISA and HMRC isn't getting their due tax then... yikes.

If it was just this then it could be sorted out by preventing them from issuing further ISAs. There are mechanisms in place for voiding ISAs and reporting the untaxed income so that HMRC can follow up with individual taxpayers.

Shutting down the whole operation suggests there is something wrong with the whole operation.

sully1311

Jelli wrote: »

Yeah, I've just listened to it now. I need a teddy bear to cuddle as I'm not a rich person despite investing thousands which I got from forfeiting life. I'm on 12k a year so not a high income person by any stretch.

I didn't mind lending to small-to-medium businesses and the risk that involved, but only if they existed. There was nothing on the website that said your capital could be at risk if it was all a lie.

Yes there were statements saying it was at risk.

Alexland

My guess on why FCA froze them is that the 'interest payments' may have required new sales for the cashflow as the existing money was... 'tied up' in loans to all these sub companies from where it may be onward unavailable.

I don't think the ISA validity is significant. If its not an ISA then people would need to pay their own tax.

Alex

Sledger

The FCA has been in there quite some time now and one assumes the incoming cash flow from these loans is being monitored by FCA ( Assuming these loans are real with no defaults as still claimed on LCF&Trustee 3 Jan 2019 update and that bond holders will get there money back ). Moreover, if these loans are short term paying back monthly capital and Interest there should be quite a bit of visible evidence of cash coming in on a regular basis to substantiate that 3 Jan 2019 Statement update. One assumes FCA monitor and vet what LCF publishes or am I wrong.

jimjames

Alexland wrote: »

I don't think the ISA validity is significant. If its not an ISA then people would need to pay their own tax.
Alex

I agree about the ISA, it's not really an issue if the ISA wasn't valid then any holders would be taxed on the interest subject to the normal allowances.

Sledger wrote: »

The FCA has been in there quite some time now and one assumes the incoming cash flow from these loans is being monitored by FCA ( Assuming these loans are real with no defaults as still claimed on LCF&Trustee 3 Jan 2019 update and that bond holders will get there money back ).

I think the "no defaults" is also semantics and misleading. If I lend you £1000 at 10% interest for 5 years then you have absolutely no way of knowing until year 5 that the £100 interest I've been paying to you each year was actually the returning the capital of the loan back to you and I had no other money.

Year 5 I default because I have insufficient funds to repay you. I've already used £500 to pay you "interest" and have spent the other £500 on myself. However until year 5 you can happily claim that there has been no default.

In fact the web of companies might enable the default to be hidden much longer. Imagine that my friend then ask to borrow £2000 from you. You're happy that I've been paying you back getting good rate so go ahead. Friend passes the £1000 to me so I can pay you back and then starts paying you the £200 interest they owe, still from your capital.

Still no default until year 10 when the friend runs out of money. Multiply with many new investors and it can carry on for quite a while.

Alexland

Yes I would imagine the repayment terms to the sub companies were extremely generous and if so the bond interest would have to come from sales rather than loan repayments. There's a limit to how long you can keep growing to make that workable.