SA302 and Mortgage application

SA302 and Mortgage application

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Client desperate for accounts figures for mortgage application. 2nd full year of self employment. He provided them with 2012/13 SA302 which we had to request from HMRC. Bank also insisted on 13/14 figures. So accounts and tax return drafted over the weekend. He has now shown these to the bank along with our tax adjustmentss/computation although not yet submitted to HMRC. The net figures are not high enough for his mortgage application so he has asked if we could re draft ignoring all of the expenditure! If we can't he wants his books back so that he can go to another accountant to prepare - he says he just won't give them his expenses! I've said no as it would appear to me to be falsifying his accounts to defraud the bank, and I won't do that. Best I can offer is to provide HMRCs genuine calculations for 2011/12 (he was mainly PAYE then and his income is higher) as the Bank are insisting on two years figures and strictly the 2013/14 figures do not need to be available to HMRC until 31st Janaury 2015. Two questions;- 1) Would you also consider it to be deceiving the mortgage lender if we were to change the accounts to remove the expenditure (he is willing to take the tax hit)?  and 2) if he takes his books elsewhere for his 13/14 accounts to be redone would you tell the new accountant assuming they seek professional clearance of course.  

Replies (8)

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By johngroganjga
17th Jun 2014 12:20

Yes and Yes.

And of course don't release his papers until he has paid you, presumably at premium rates for working over the weekend..

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By occca
17th Jun 2014 13:11

Agree with John

1. Yes

2. Yes

The client can't pick and choose what they do

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By razertoo
17th Jun 2014 13:50

Agree with John and Occa

And send him packing. I despair at some of the things clients think you will do for them.

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Locutus of Borg
By Locutus
17th Jun 2014 13:56

Oh dear ...

It will end up being one send of figures for the Mortgage Broker and another for the Tax Man.

Agree, with the above.  Send him packing.

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By Roland195
17th Jun 2014 14:32

Asking for trouble

As the bank/underwriter are seeking to rely on a tax schedule to confirm income instead of the accountant prepared & certified financial statements, then they are asking for trouble in my opinion however that is besides the point.

As far it being fraud then, basically yes it would be in reality (or using a common sense approach) however would it be legally? The SA302 in this instance is based on taxable profit. The client is under no obligation at all to claim relief for expenses, capital allowances etc. In a more marginal case, the same effect could be achieved by increasing the rate of personal use add-backs.

I would not acquiesce to the request but it is not black & white.  

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Replying to Matrix:
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By Helen Crowley
17th Jun 2014 17:04

Dilemma

Agree your point Roland re the Bank relying on the SA302 which seems rather short sighted, this must be a new tactic for some mortgage lenders. Your thoughts in the second paragrapgh highlight the dilemma. For me it is one thing to disclaim AIA or legitimately tweak the private use add backs after further discussion about how much say his van is used for private motoring but another entitrely not to claim any expenses at all because the client wishes his available income to appear higher than it actually is. Surely the mortgage application form would ask for detail of business expenditure regardless of figures on an SA302? I have also suggested that the Bank get in touch direct so that we can discuss with the clients permission. I can then explain the tax adjustments and certain items of expenditure that may be non-recurring.

 

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RLI
By lionofludesch
17th Jun 2014 17:25

Difficult to Understand ?

Why do clients find it so difficult to understand that they get turned down for mortgages because they don't earn enough ?

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By andy.partridge
17th Jun 2014 17:51

Shouldn't be asking

This sounds like blackmail to me.

Remind them of your Money Laundering obligations and your professional duty to any new accountant considering whether or not to accept an appointment.

If you have an interest in keeping the client tell them not to be silly and not to mention it again or you will start to believe they were serious. If they go elsewhere anyway, you know what you have to do.  

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