Good old banks !

Good old banks !

Didn't find your answer?

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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Time for change
By Time for change
07th Jun 2012 14:38

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!

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By Ian Bee
08th Jun 2012 09:33

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.

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By Eddystone
04th Aug 2012 23:22

Is everything based upon tax returns now ?

Believe it or not, had this again this week with HSBC, the guy on the phone seemed to understand but said he was complying with FSA regulations. Maybe he's right, is anyone else finding that there's an increasing tendency to base everything, lending or grants, upon tax returns now, rather than accounts ?

I tried to explain that capital expenditure is what one spends the profits on and is not an expense in arriving at profits. As Ian says, it shows a complete lack of understanding.

And no, it wasn't ICE before

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