Our client needs a mortgage.
Accounts are showing a healthy profit which would be more than enough to support the application, but the client bought a van in the year, so the all important SA302 figure will be quite a lot lower than the accounting profit if we claim max AIA, and will take it below the required figure.
We don't have to claim AIA, or could claim part of it, so we could achieve a taxable profit of anywhere between accounts figure and a much reduced figure dependent on our claim for AIA. I am relatively happy with restricting the AIA claim and have explained to client how CAs will work in future years if we don't claim full AIA this year. Also, client is aware that the tax bill will be higher this year as a result.
But now client is suggesting we put in a reduced AIA claim, get the SA302 from HMRC for the mortgage and then amend the tax return in a few months time (they are more switched on to tax than I thought!).
There is nothing to stop us from doing this in tax terms, but the ethical side of me is really struggling here and I am not happy. Part of me thinks it is fair enough given mortgage lenders insistence on using SA302s only which is not realistic (I have checked with the broker and they won't even look at the accounts or accept any explanations form us as to why there has been a decrease in taxable profits versus accounts figure). The other side of me is worrying about my PI insurance etc if they defaulted on the mortgage and the mortgage co ever found out - but then the accounting profit does support the claim - I am not suggesting anything dodgy in accounting terms.
What would you do?