ERROR IN TREATMENT OF THE AUGUST RECOVERY IN FS TAX RETURN STATEMENTS
For those of you who are invested in this loan, you should be aware that FS seem to have made a mistake in the way they have recorded the August partial recovery in the Tax Return statement for the current tax year (2019-20).
To see the problem, you need to call up the detail of this year's (provisional) Tax Return statement : first manually select the date range for the current tax year (06/04/2019 -05/04/20), then click on the 'Filter Results' button, and finally click on the +' signs on the 'Capital losses from defaulted loans' line and the 'Capital recovered from defaulted loans' line to reveal the detailed entries.
If you now search for the entries for loan 1165075552A (which is the 'spin-off' loan, representing the recovery made in August) you will find there are two identical entries - one under Capital losses, the other under Capital recovered. The overall effect is that the Tax Return statement shows NO net recovery from this loan in the current tax year, which is of course incorrect.
Furthermore, if you now examine the original default entry for the base loan 1165075552, which can be found under 'Capital losses from defaulted loans' for tax year 17/18, you will see that the amount in that entry has been reduced to reflect the recent recovery. This has had the overall effect of retrospectively reducing the amount of net capital losses (i.e : losses - recoveries) in that tax year - something that should NEVER happen retrospectively as the result of a recovery in a subsequent year. You can check this for yourself if you have (as I do) a printed record of the original statement for 17/18.
What Funding Secure should have done is to post the Capital loss entry for 1165075552A not to the current tax year 19/20, but instead to tax year 17/18 : together with the reduction in the original default entry amount (also in 17/18), this would have left the overall figures for 17/18 unchanged, whilst recording a net recovery in the current year. This is the correct technique, and the one previously applied for example in the case of the Whitehaven loan which was originally defaulted in 17/18 with a tiny partial recovery the following tax year.
Obviously, this error is only of concern to those wishing to use the FS Tax Return statement as a basis for claming losses to offset against income this tax year.