A very well known mortgage provider has just turned down a loan which appeared to be well within their lending parameters.
"The taxable profit was much less than the accounts showed"
"Er, yes, it would be - the client bought an £18k pick-up which was offset against his tax. But this was capital expenditure and so doesn't affect his real profits or accounts"
"Profits are profits, and we only use the taxable profits"
"But if we hadn't claimed the tax allowance on the pick-up, then his profits would be the same as the accounts - would this have been acceptable to you?"
"Yes, probably"
Jeez ! Anyway, the upshot was that we got the mortgage elsewhere
Replies (3)
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Let's stick a finger in the air
the mortgage provider wouldn't have been the ICE, ICE, Baby, one, would it?
I certainly had exactly the same scenario last year. Must be the same stable as HMRC, when it comes to common sense!
Do they know what they mean?
I can sort of see where they are coming from, but they have misunderstood what they want. If they mean the profit before tax adjustments, that would make sense as it is likely to be accurate and it is hard for the client to say that in reality the profit was higher. But to say it's the taxable profit after adjustments is stupid and shows a complete lack of understanding.
Not difficult to see why the financial system is in such a hole with attitudes like that.