I'm employed, fiancee is self-employed with 5 years "unaudited" accounts...

Hi

I'm employed, and have been with the same company for over 6 years.

My fiancee is self-employed, and has been for over 5 years. Her accounts are compiled each year by a chartered accountant. On the front cover of each year's accounts it states they are "unaudited".

We both have a personal account each, and a joint account, with the same bank. My fiancee's business account is also with the same bank. Our current mortgage is also with this same bank.

We have just sold our house, and had our offer on a new house accepted. We wish to stay with the same bank for the new mortgage, and we have the appointment with the mortgage manager on monday.

I have just come across something which could bring the whole thing crashing down though. When I did the mortgage "agreement in principle" a few weeeks back, I said upfront that my fiancee was self-employed and asked whether it would impact our application. I was asked whether she had "3 years worth of accounts" to which I replied "yes". I was then advised it would not be a problem.

I was just looking at the check-list for things I need to take on Monday and it says "if self employed, 3 years of audited accounts". Whilst getting this information together, I noticed that the accounts are in fact "unaudited".

Is this going to present itself as an issue? The income of my fiancee will be requirerd for us to borrow as much as we need (i.e. my salary on its own would not be enough).
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Replies

  • koexelekkoexelek Forumite
    7.8K Posts
    If you have the Inland Revenue documents to back up the accounts ( SA302's I think ?) that should be OK for the lender.
    I am a Mortgage adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Hi

    Thanks for the reply.

    Are the documents you're referring to the Statment of Accounts i.e. the ones showing how much tax you've paid etc?
  • koexelekkoexelek Forumite
    7.8K Posts
    wj209980 wrote: »
    Hi

    Thanks for the reply.

    Are the documents you're referring to the Statment of Accounts i.e. the ones showing how much tax you've paid etc?

    Yes.

    A lender will normally lend on the figure you have paid tax on. If you've paid tax on the income, I'm sure most lenders will be happy to use it


    If a certified or chartered accountant has produced audited accounts for you, they will normally take their word for it.
    If not though, they will want the Inland Revenue forms.
    I am a Mortgage adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • koexelek wrote: »
    Yes.

    A lender will normally lend on the figure you have paid tax on. If you've paid tax on the income, I'm sure most lenders will be happy to use it


    If a certified or chartered accountant has produced audited accounts for you, they will normally take their word for it.
    If not though, they will want the Inland Revenue forms.

    I really hope we'll be okay. I'll just take the HMRC statements through which state how much tax was paid.

    The accounts were produced by a chartered accountant (this applies to every year since she opened her business) but on the fron it does say "Unaudited Accounts for xxxxxx". I just hope they don't refuse to accept it.
  • wj209980 wrote: »
    I really hope we'll be okay. I'll just take the HMRC statements through which state how much tax was paid.
    .

    The statements of account are slightly different, and I dont think that's acceptable to lenders (something I wish I had been told by First Direct when I sent them 3 years submitted tax returns and statements of account)

    However, the lender should definately accept SA302 letters (those are the ones which tell you the detailed breakdown and working out of your tax). If you submit your tax return online with HMRC, they do not automatically send you these each year, so I just requested 5 years worth last week and HMRC sent them within a day.

    Hope you get your mortgage easily sorted,
    Matt.
  • The statements of account are slightly different, and I dont think that's acceptable to lenders (something I wish I had been told by First Direct when I sent them 3 years submitted tax returns and statements of account)

    However, the lender should definately accept SA302 letters (those are the ones which tell you the detailed breakdown and working out of your tax). If you submit your tax return online with HMRC, they do not automatically send you these each year, so I just requested 5 years worth last week and HMRC sent them within a day.

    Hope you get your mortgage easily sorted,
    Matt.

    Our accountant alwyas submits the tax return, and I don't believe I've ever seen an SA302 letter. Our mortgage appointment is on Monday so I won't be able to get hold of them by then.

    Will the fact that the accounts are produced each year by a chartered acountant be enough do you think, even though it says "unaudited" on the front?
  • wj209980 wrote: »
    .. Will the fact that the accounts are produced each year by a chartered acountant be enough do you think, even though it says "unaudited" on the front?
    If the chartered accountant has signed them off, then getting them audited should not produce too many headaches.
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • Okay well, as our mortgage appointment is on Monday, I'll just have to take what i've got now and hope for the best. If they don't accept it then I'll have to progess what I can whilst I'm there and then provide them with an audited version of the accounts as soon as I can (it's just going to hold things up and be an additional cost but I guess that's life hey!)

    I would have thought though that common sense would mean that providing the HMRC tax invoices (with proof of payment) would be sufficient. After all, it proves that we have declared xxx amount of profit on which we need to pay tax over a number of years - why else would we effectively be asking the government to charge us tax if we hadn't earned the income?
  • TimmneTimmne Forumite
    2.6K Posts
    Unaudited accounts are the norm for small businesses; unless your fianc!e is turning over many hundreds of thousands each year then I doubt an accountant would want to audit them- I certainly wouldn't. She can request an audit whatever the weather but they are not quick and cost anywhere from a couple of grand and that's for a very basic one!

    Essentially, don't be put off by the unaudited bit, they'll be the same as 99% of small business' accounts.
  • Timmne wrote: »
    Unaudited accounts are the norm for small businesses; unless your fianc!e is turning over many hundreds of thousands each year then I doubt an accountant would want to audit them- I certainly wouldn't. She can request an audit whatever the weather but they are not quick and cost anywhere from a couple of grand and that's for a very basic one!

    Essentially, don't be put off by the unaudited bit, they'll be the same as 99% of small business' accounts.

    Hi Timmne

    Thanks for this, it gives me a bit more confidence! And my fiancee certianly isn't turning over hunderds of thousands - wish she was though lol!

    Anyway, to cover me as much as I can i'm going to take all manner of documents with me.
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