why can't IFA's and mortgage lenders just be honest?

why can't IFA's and mortgage lenders just be...

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A month ago I was asked to produce a set of accounts for the year ended 30 April 2014 as these were needed to assist client in getting a mortgage. Previous years profits were not good enough.

I advised client that the banks are likely not to accept these as they will need tax return SA 302. IFA said it would not be a problem.

I duly produced and signed off accounts last week. As I know the situation I charged client slightly more than I would have and carried out further work to substantiate the figures.

Now IFA are asking client for Inland Revenue (not HMRC) figures to support the accounts. I have just informed client this will not be possible until 6/4/15.

Now the clients expectations has been increased and I will be left to pick up the pieces. Why can't IFA'S or the banks just say no, rather than prolonging things?

Replies (8)

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By carnmores
04th Aug 2014 21:14

they're fools
But why do they have to wait till 6 4 15can you give them a reasonable projection with the sa302s

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By Jekyll and Hyde
04th Aug 2014 22:00

they have sa302's.....
... For 2012/13 and 2013/14 but the business is expanding and profits increased this year.

No doubt we will have to agree on something.

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By DMGbus
05th Aug 2014 14:03

Misunderstanding the technicalities

My guess is that most mortgage lenders, brokers and IFAs do not understand / are not aware of the self assessment basis period rules.

So to them "30th April 2014" is no different (baring 25 days in time) to "5th April 2014" I really wouldn't expect them to understand that 30 April 2014 = 2014/15 SA302 whereas 5 April 2014 = 2013/14 SA302.

This basis period rules needs explaining to the lender / broker.

A very inconvenient and costly work around might however be available - change the client's FYE to 5th April 2014.

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Replying to johnt27:
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By J_G_W
05th Aug 2014 14:09

They should be

DMGbus wrote:

My guess is that most mortgage lenders, brokers and IFAs do not understand / are not aware of the self assessment basis period rules.

So to them "30th April 2014" is no different (baring 25 days in time) to "5th April 2014" I really wouldn't expect them to understand that 30 April 2014 = 2014/15 SA302 whereas 5 April 2014 = 2013/14 SA302.

This basis period rules needs explaining to the lender / broker.

A very inconvenient and costly work around might however be available - change the client's FYE to 5th April 2014.

 

They should be. I'm an IFA, and I'm aware of it. Its not exactly rocket science and its been in numerous exams to get qualified. Unfortunately, like any career (that includes accountants), some are better than others. 

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By carnmores
05th Aug 2014 14:21

how about a change of accounting date

is that possible might it help, if changed to 3103 you could get overlap and file for a SA302 with a large taxable income figure? trade off much higher tax bill?

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By Jekyll and Hyde
05th Aug 2014 14:27

Many thanks for the replies

I had already thought reworking accounts, but the problem as always in life is that client would not wish to pay for it. 

The annoyance is that although I accept that banks/mortgage lenders no longer wish to trust accountants and the signed off accounts. I, being different from most, am willing to provide working papers or breakdown of figures to support the accounts, but I always seem to get a negative response by mortgage advisors.

My initial question last night was one of frustration, but it forms the same sentiments as other posts recently, where it is clear that a lender is happy to go with a deliberate inflation of a SA302 (most tradesman now have this knowledge and seem to be happy to work ahead of the accountant and lender and create a better picture, but suffer on the tax loss), but it is becoming more difficult for an accountant to put figures to a lender and have these trusted. After all the tax return is a self assessed workings of a taxpayers income, but can be more manipulated than a set of accounts produced by a competent accountant.

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By Roland195
05th Aug 2014 15:04

Mark my words...

The way the game is played at the moment is that the highly responsible lenders get copies of official HMG approved tax calculations that they don't even have to pretend to believe as they come directly from HMRC, a department of HMG and when has their word ever been called into question? Besides surely no-one would pay more tax than required to achieve their dastardly aims i.e home ownership.

It will swing back to certified accounts and letters from your priest sooner or later when the finance industry realises that SA302s are relatively worthless (probably after someone looks up what the SA prefix stands for).  

  

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By carnmores
06th Aug 2014 09:45

jekyl and hyde
Well that's a new one on me, offer to give them my working papers, you must be living in cloud cukoo land if a you think they will accept them and b they might understand what they are looking at. Be tougher on the client tell him how it is and why he should probably go for a change of accounting date , year ends of 3004 have all been problematic in this regard. Maybe he should incorporate anyway

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