A client has forwarded a request from their mortgage company to provide an income forecast.
The client has only been running her company since Oct 17 and taking dividends since April 18. On preparing the accounts to March 19, she had taken more dividends than reserves were available and had frequently taken additional payments she had classed as loans that were actually dividends.
Due to the nature of the business, they are VAT exempt. Income can vary substantially month to month but the client says from April they have taken a set dividend and nothing else, but the only records available that I could look at are bank statements. The clients insistent that the mortgage company knows the figures are not guaranteed and would never hold me responsible if they are not accurate which i obviously disagree with.
I've not actually seen a request like this for a few years so would like advice on what if anything you would do to provide income forecast. Are management accounts overkill? Also what caveat should be added to the letter?