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Signed accounts for a mortgage application

Mortgage application needs last two years’ accounts produced and signed by a qualified accountant.

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I don't currently have an accountant to file my returns, I've always done my own, but now I'm trying to get a mortgage and most are asking for my "last two years’ accounts produced and signed by a qualified accountant."

Is it possible to get a qualified accountant to "prepare and sign" my last 2 years accounts if I supply them with my last 2 years profit and loss and balance sheets?

Replies (46)

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By williams lester accountants
03rd Dec 2021 16:43

Unlikely, they would (certainly i would) want to produce the accounts from source records to ensure they are complete and correct.

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By johngroganjga
03rd Dec 2021 16:45

No they won’t, because they won’t have produced them.

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By John R
03rd Dec 2021 16:52

No, not without them checking your figures with the underlying accounting records and correcting any errors that you have made. If the figures turn out to be different to the ones that were submitted within your self-assessment tax returns, these would also have to be amended. As most lenders will want to see the HMRC Tax Year Overview that shows whether or not you have settled the tax, any additional tax that becomes payable will also need to be paid. This could delay the mortgage application.

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By SXGuy
03rd Dec 2021 17:01

Which lender has asked this? It really does annoy me when a lender specifies this as not all people have accountants and they know full well you can self certify.

Hmrc have explained to these lenders that all the required proof you need is an Sa302 and tax year overview.

Lenders don't have to do what hmrc suggest but I would say they are being difficult to not accept that.

My advice would be to seek a new lender and at the very least onboard a mortgage broker who knows what they are doing and can fight your corner for you.

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Replying to SXGuy:
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By Paul Crowley
03rd Dec 2021 17:08

Depending on the loan, lender taking the risk can be permitted to consider that they prefer security of accounts prepared by someone who should be expected to understand the tax rules.
We have all seen complete hogwash on prior submissioons, but usually understating income so logically less risky to lender.

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Replying to SXGuy:
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By Wanderer
03rd Dec 2021 17:37

OP has a limited company. In my experience most lenders WOULD require certified accounts.

AND it's not the gift of HMRC to dictate what lenders require.

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Replying to Wanderer:
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By Catherine Newman
03rd Dec 2021 18:04

I don't read it as a limited company. I think it is self-employment.

I have been told that one of my clients who became a ltd company and had a big directors loan account was rejected by Santander for having a negative balance sheet. The IFA was then applying to Coventry Building Society and I was told I would more than likely have to provide an Accountant's Reference. This was about 2 months' ago and I haven't heard anything.

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Replying to Catherine Newman:
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By Wanderer
03rd Dec 2021 18:47

Catherine Newman wrote:

I don't read it as a limited company. I think it is self-employment.

Click on the OP's name & read their other questions.
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Replying to Wanderer:
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By Catherine Newman
03rd Dec 2021 21:12

OK. I am fairly new to Accountingwebb. Have now looked but still think it is Self Employment.

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By Wanderer
03rd Dec 2021 21:22

Both new & naive unfortunately.

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Replying to Catherine Newman:
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By Hugo Fair
03rd Dec 2021 21:27

Well it's not a certainty ... but the only reference within OP posts' history is:

27th Feb 2020 - "I have started a limited company with 3 ordinary shares between 2 directors and we've now realised A and B shares are more suited, as it would allow us to pay dividends at different rates to each share class."

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Replying to Catherine Newman:
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By Paul Crowley
04th Dec 2021 02:50

If it is a mortgage for the person then it would be self-assessment
Unfortunately a company owned by applicant is termed self employment by most brokers and many lenders

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Replying to Catherine Newman:
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By Mr_awol
06th Dec 2021 11:52

Catherine Newman wrote:

I have been told that one of my clients who became a ltd company and had a big directors loan account was rejected by Santander for having a negative balance sheet.

Seems fair enough. If the company has a negative balance sheet, then it either hasnt (cumulatively) made any money or it did make money, paid it out, and then made losses in more recent times. Of course it could be historical or start-up losses and the company might be thriving.

But the point is, ignore to whom the dosh is owed - if it's insolvent then it is likely to face challenges which it wouldn't face otherwise.

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Replying to Wanderer:
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By JD
05th Dec 2021 09:45

Most reputable lenders have signed up to an agreement between the council of lenders and Hmrc, to use of SA302 and TOV. It is highly frustrating that too many brokers are ignoring this agreement and cause a lot of dead time with silly and repeated requests.

It may not be in HMRC gift but lenders and brokers should respect what they have signed up to.

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Replying to JD:
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By Wanderer
05th Dec 2021 10:05

You've misinterpreted the situation. The SA302 & TYO agreement is all about lenders accepting printed SA302s from individuals' HMRC online accounts or accountants together with the TYOs RATHER than HMRC being constantly contacted for official, printed, HMRC SA302s.

This is to save HMRC's time and enable the information to be obtained quicker.

It's NOT to dictate that that is all that the lenders require. ATT put this out at the time:-

Quote:
Frequently the mortgage lender will ask for form SA302 as well as, or instead of, a financial reference. HMRC and the Council of Mortgage Lenders have worked together to agree an approach which should make the provision of SA302s easier and quicker. Further details are below. In all cases you should check the individual requirements of the mortgage lender in relation to your client.

HMRC and Council of Mortgage Lenders (CML) agreement
Following the introduction of stricter rules for mortgage applications many lenders have insisted on having confirmation of income backed up by sight of form SA302. Historically, form SA302 was not downloadable from the HMRC online system and the only solution was to phone HMRC and request a copy which inevitably caused delays. HMRC announced that they would refuse to issue paper
copies of SA302s from the 4th September 2017.

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Replying to Wanderer:
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By Paul Crowley
05th Dec 2021 15:01

Agree

Just wish mortgage brokers would read this stuff and stop telling my clients that I am wrong and that any decent accountant (always their accountant) can get the HMRC item sent within a week

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Replying to JD:
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By Paul Crowley
05th Dec 2021 14:56

Agree
Lenders wanted paper SA302s wasting just so much HMRC time. Reason being that some dubious "accountants" would for a price tell any lie the client wanted.
Lenders did not want to waste their time checking that the personal bank statements agreed the claimed profits made
HMRC agreed with the then Council of Mortgage lenders a short cut for both parties
The agreement was to use the electonic submitted tax return software to provide the tax calculation (from the agent software), with HMRC making the TYO available to all so that the total tax could be agreed with the the agent software

Trouble is nobody passed that down the line to the lenders workers and agents
Lenders and their agents are the people at fault

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Replying to SXGuy:
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By Mr_awol
06th Dec 2021 11:47

SXGuy wrote:

Hmrc have explained to these lenders that all the required proof you need is an Sa302 and tax year overview.

Lenders don't have to do what hmrc suggest but I would say they are being difficult to not accept that.

Not exactly. HMRC have agreed with the CML that lenders will not insist on HMRC issued docs and will accept agent prepared SA302s with the overview. That has no bearing on what the lenders 'should' or 'can' request. For example Handelsbanken always seem to ask for the full SATR instead of just the comp.

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By Paul Crowley
03rd Dec 2021 17:02

Not Likely, unless a reputation is unimportant
Form will ask
How long acted for client
Answer
Since yesterday but prepared the accounts today that were submitted years ago

Yea right

Not a problem
Get a loan broker
He will fix it with SA302s that you can print

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By Leywood
03rd Dec 2021 17:06

I wouldnt touch it with a bargepole, without checking. Not prepared to put my neck on the line for a DIYer.

Especially with the likes of https://www.accountingweb.co.uk/any-answers/change-ordinary-shares-to-al...

Who knows what else is wrong.

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By Wanderer
03rd Dec 2021 17:39

So you've been in business over three years, have a limited company, sufficient turnover to be VAT registered, questioned the advice of Les Howard on a VAT point, have alphabet shares & still don't think it worthwhile employing a professional to properly prepare your accounts, tax returns etc. & give you advice?

& no doubt your current query will soon get all urgent, urgent.

I'd borrow Leywood's barge pole & put a stick on the end to push the request away.

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By Catherine Newman
03rd Dec 2021 17:53

That's interesting. People go on People Per Hour and ask for a qualified person to provide a countersignature. There was one where an ATT had prepared the accounts and a Chartered Accountant got awarded the job of countersigning it.

This is another reason why clients need accountants.

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Replying to Catherine Newman:
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By Paul Crowley
03rd Dec 2021 19:01

ATT and AAT both usually accepted, or so I thought
I would never stick my moniker on a strangers accounts
Amazed others would

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Replying to Paul Crowley:
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By Catherine Newman
03rd Dec 2021 19:16

I didn't get accepted when I bid as CIOT but a newbee ICAEW got it. I will never bid again.

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By Mr_awol
06th Dec 2021 11:53

Catherine Newman wrote:

I didn't get accepted when I bid as CIOT but a newbee ICAEW got it. I will never bid again.

Right decision, if perhaps for the wrong reasons

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Replying to Paul Crowley:
ALISK
By atleastisoundknowledgable...
03rd Dec 2021 19:18

For a few £££££ …

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By cs1949
03rd Dec 2021 19:25

Thank you for your responses.

I have on many occasions paid for accountants' or solicitors' advice, such as for VAT registration. However, my accounts are so straightforward that I've filed my returns for over 10 years without any issues and my accounting software subscription covers the payroll and VAT.

I think it's unfair for lenders to make it a compulsory part of the application to require accounts prepared by an accountant. I appreciate they are trying to cover themselves, but I've heard enough stories about ridiculous loopholes for self-employed mortgages -even through an accountant. In fact, my broker told me in most cases accountant's references are requested not to reduce the level of risk to the lender, but just so they don't have to look through full accounts.

I have had a mortgage offer (albeit for less than I wanted) from Natwest, who didn't require an accountant. Some lenders are less clear on their requirements and you just have to wait until it's in the hands of the underwriters. So I wanted to see what would be involved in getting 2 years accounts prepared and signed.

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Replying to cs1949:
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By David Ex
03rd Dec 2021 20:14

cs1949 wrote:

… my accounts are so straightforward that I've filed my returns for over 10 years without any issues and my accounting software subscription covers the payroll and VAT.

As Donald Rumsfeld said: “We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns- the ones we don't know we don't know.”

You’re in the latter situation. Like me saying I won’t take medical advice as it’s only a boil on my b*m and Google says it’s probably nothing.

cs1949 wrote:

I think it's unfair for lenders to make it a compulsory part of the application to require accounts prepared by an accountant.

As a long suffering bank shareholder, I disagree. Using the medical analogy again, would you expect to be offered a decent life policy simply on the basis of telling the insurer that you feel OK?!

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Replying to David Ex:
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By Paul Crowley
03rd Dec 2021 20:31

Agree
DIY tends to fall one of two directions
Claim outrageously or claim almost nothing
The accountant sticks to the middle ground knowing what other similar traders do and have usually defended against HMRC intrusion

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Replying to David Ex:
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By Catherine Newman
03rd Dec 2021 20:56

My view is-don't depend on an accountant. If you want to lend do. If you don't want to lend don't. Accounts could be filed to HMRC for the skies the limit and then amended within 12 months. What use is a submission to HMRC?-none.

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Replying to Catherine Newman:
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By David Ex
04th Dec 2021 00:03

Catherine Newman wrote:

My view is-don't depend on an accountant. If you want to lend do. If you don't want to lend don't. Accounts could be filed to HMRC for the skies the limit and then amended within 12 months. What use is a submission to HMRC?-none.

Accounts prepared by an accountant are more likely - even if only marginally more maybe - to reflect the reality. Once you go down the self certification route, it’s a shot in the dark.

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Replying to cs1949:
RLI
By lionofludesch
03rd Dec 2021 22:33

cs1949 wrote:

Thank you for your responses.

I have on many occasions paid for accountants' or solicitors' advice, such as for VAT registration. However, my accounts are so straightforward that I've filed my returns for over 10 years without any issues and my accounting software subscription covers the payroll and VAT.

I think it's unfair for lenders to make it a compulsory part of the application to require accounts prepared by an accountant. I appreciate they are trying to cover themselves, but I've heard enough stories about ridiculous loopholes for self-employed mortgages -even through an accountant. In fact, my broker told me in most cases accountant's references are requested not to reduce the level of risk to the lender, but just so they don't have to look through full accounts.

I have had a mortgage offer (albeit for less than I wanted) from Natwest, who didn't require an accountant. Some lenders are less clear on their requirements and you just have to wait until it's in the hands of the underwriters. So I wanted to see what would be involved in getting 2 years accounts prepared and signed.

Well, those are the risks you take as a DIY accountant. One day, someone will come along and think you're not independent enough. Or put another way, you have an interest in presenting accounts in a particular way.

It's not all bad news. You say your accounts are simple so it shouldn't cost a lot to get accounts done from scratch. And they only want two years' accounts not all ten, so you've saved eight years' fees.

Or you could find a lender who's not bothered about you doing your own accounts. Or you could resign yourself to doing without the loan.

Lots of options there.

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Replying to cs1949:
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By Wanderer
04th Dec 2021 08:16

cs1949 wrote:

In fact, my broker told me in most cases accountant's references are requested not to reduce the level of risk to the lender, but just so they don't have to look through full accounts.

Do not attach any credence to what mortgage brokers tell you. They will often just pour money in your ear.

I've lost count of the amount of times a client has said "All the broker needs is this, this & this, then they'll 'put the package together' & the mortgage application will sail through.". The reality is somewhat different.

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Replying to Wanderer:
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By Paul Crowley
04th Dec 2021 17:53

+1
Mortgages cause so much dead time

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By bernard michael
04th Dec 2021 09:47

NO

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By bernard michael
04th Dec 2021 09:53

Just to clarify an earlier point. Would the OP state whether the accounts are for a limited company or not ??

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Replying to bernard michael:
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By cs1949
04th Dec 2021 10:36

It's a limited company.

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Replying to cs1949:
RLI
By lionofludesch
04th Dec 2021 10:44

cs1949 wrote:

It's a limited company.

"OK. I am fairly new to Accountingwebb. Have now looked but still think it is Self Employment."

Well, that's cleared up now.

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Replying to lionofludesch:
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By Hugo Fair
04th Dec 2021 11:34

Well yeah ... but it was Catherine Newman to whom you're intending to respond?

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Replying to Hugo Fair:
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By lionofludesch
04th Dec 2021 18:14

Hugo Fair wrote:

Well yeah ... but it was Catherine Newman to whom you're intending to respond?

The world in general. That's the beauty of an internet forum.

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Replying to lionofludesch:
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By Hugo Fair
04th Dec 2021 19:40

Neat side-swerve, you've the makings of an excellent Press handler for politicians!

I was merely trying to clarify (to the world in general or at least those trying to follow the convoluted thread) the context in which your comment was pertinent.
To borrow a phrase from TD I'm obviously going to have to watch my wording more carefully if my attempts at help end up causing offence.

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By sarahg
05th Dec 2021 12:07

Simple answer is that you will need to engage an accountant

Then they will need to prepare the accounts and tax returns themself, after you provide all accounting records for the periods in question.

Amended accounts will then need to be filed with Companies House and HMRC - assuming there will be adjustments.

Then they will be able to fulfill the request for signed accounts for the mortgage company

You're looking at least £2,500 + VAT I suspect

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By Michael Davies
06th Dec 2021 10:25

What use to hack me off,was when Lenders requested forward income forecasts.

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Replying to Michael Davies:
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By Hugo Fair
06th Dec 2021 10:56

Simples back in the 1970s ... just take the desired amount of borrowing / apply the appropriate lender multiplier / add £99 to make it less obvious / submit forecast!

And that's how people on say £3,000 pa managed to buy houses for around £15,000 that are now worth north of £1m ... win:win for those who survived the subsequent 18% interest rates.

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Replying to Michael Davies:
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By Catherine Newman
06th Dec 2021 17:20

I refused to provide one saying my PB told me not to.

It made bank clerks very annoyed and they would ask why I was being so difficult.

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By jwill76
06th Dec 2021 11:39

"However, my accounts are so straightforward that I've filed my returns for over 10 years without any issues"

But now you need one....or maybe until you get a compliance check of some kind and find its been completed wrong from day one

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