setup a limited company to get 3 months wage slips for a mortgage

notmyrealnameuk

Hello

First post on here

I'm self employed and whilst capable of paying the mortgage and bills as well as supporting 2 children and my girlfriend who doesn't work, I had to have my parents take out a 5 yr term interest only mortgage in order to stay in our home, they are 63 and 62 and the term ends nov 2015

I had to do all this after splitting with my ex who I had a joint mortgage with, we got this deal in 2006 where I self certified and she had a gross income of £44,000, and I was refused by the lender to carry on paying it despite the fact I was acutally paying it on my own for over a year when she moved out

My problem is even if I declared every penny I earn, it still wouldn't be enough net income to get the £155,000 I need

On the plus side, we are expecting a payout from a death in the family from BT somewhere in the region of £36,000 upwards, backdated from 2008 when my girlfriend's father passed away, she has already taken 50% of the pension which at the time was £72,000 so we are none the wiser if we will receive interest from 2008, and we have applied for solicitors to handle getting the money paid if they don't make payment by June 1st this year as it would have been 14 months where they say it has "gone to panel" aka limbo

I keep reading PAYE workers having an easier ride by submitting 3 months wage slips from the company that employs them and submitting bank statements to prove this

So I was thinking, why not form a limited company of my own, either with me as the Director or someone else, use some of the £36,000 that we are due to put into a company bank account and pay myself for 3 months

Then goto a lender and say there you go my friend, 3 months wage slips and here's the bank account to prove it

I would also be able to use my self employed income as well (approx £20,000 net income and this is without having to declare absolutely everything to keep tax payments down) and will be using approx £25,000 as a deposit from the £36,000 payout, so I would actually on paper look very attractive as an applicant

Surely it can't be the answer to my problems? But I'd love to know what anyone thinks about this? I'm desperate to keep my family in our home as it is a very safe area for kids to grow up with good schools and I've built my business around it

kingstreet

No-one will help you to obtain a mortgage by deception.

ILW

You will be asked how long you have been working for the company. 3 months will tend to lead to a rejection.

The_J

You would probably avoid prison because of your family but you would be fined, unable to obtain credit ever again, lose your business and your house.

kingstreet

What is your net profit, as declared to HMRC for the last three years?

This is gross income, less expenses and capital allowances, but before personal allowance, income tax and NI.

See box 30 of SA103S (page 12) - of the self employed section of your tax return.

What tax credits and child benefit do you receive?

chalkie99

On the plus side ...... there has been a death in the family

Jeez!

FraudBuster

Tax fraud and mortgage fraud.

antrobus

FraudBuster wrote: »

Tax fraud and mortgage fraud.

Can't see how it's 'tax fraud' to set up a limited company, pay some cash into the company bank account, and then pay yourself a salary.

notmyrealnameuk wrote: »

...
I keep reading PAYE workers having an easier ride by submitting 3 months wage slips from the company that employs them and submitting bank statements to prove this

So I was thinking, why not form a limited company of my own, either with me as the Director or someone else, use some of the £36,000 that we are due to put into a company bank account and pay myself for 3 months
...

The main drawback of this cunning plan is that by paying yourself through PAYE for 3 months you'll end up paying tax on the £36,000 that you otherwise would not have to pay. Apart from the fact that any lender is bound to ask sensible questions such as; how long have you been working for the company, how long has this compnay been trading, who owns it, can we see some accounts, etc etc and see through the deception pdq.

A more sensible approach would be to answer the questions asked in post 5 and provide some info about how much money you're after.

kingstreet

notmyrealnameuk wrote: »

and this is without having to declare absolutely everything to keep tax payments down

Antrobus - I think FB was probably referring to the above...

GMS

Whether you pay yourself a salary or not you would be considered self employed by a lender if you held typically 25% or more shares of the company.

What you are proposing is not something you should consider. As has been said the consequenses are dire. It is very very easy for a lender to look into company directors and do checks.

As you try to keep your tax liabilities down you cannot then expect to borrow against an inflated figure.

notmyrealnameuk

some pointless replies here so far and some helpful ones too, let's keep the comments to constructive only please so others can skim through this post, and if you can't do that go and stand in the corner and behave

i did suspect the lenders would look at the company and how long it's been trading, as we have until nov 2015 it may be an option to start the limited company sometime this year and trade for a year with a vast amount of income coming in from the money we're expecting and then employ me somewhere down the line

i have had a chartered accountant do my books since 2004 and i believe the net profit is stated clearly in each year end so i will put these down below:

current year end is being worked out as is not with the accountant yet

previous year ends are below and there was an 18 month and 6 month i believe as i was switching from limited company to self employed

year ended 30 sep 2010
22,794

year ended 31 mar 2009
13,477

year ended 31 mar 08
28,069

these figures look terrible, but is down to a lot of claims for expenses like mileage of 12,000 miles a year etc which was £6,000 i think at the going rate of 40p for the first 10,000 and 25p for the 2,000 miles thereafter

total we need will be £120,000, which is totally unachievable by these numbers and even if i did reduce my expense claims to no mileage at all and declare all my cash i still run the risk of getting clobbered with a massive tax bill and may still not have enough income to raise the amount, which is looking like a multiple of 4 so i would need net profit of £30,000, totally unachievable in the current state of the economy!

i've just gone back to self employed after being an employee of my own limited company so my first tax year that i believe could actually be of any use would be the one im working in now apr 2012 - mar 2013

i have made a note of every job i've done as usual but this time i've also noted the cash jobs to see my true income, as of yet i have no plans to declare that unless it is the deciding factor between getting enough for a mortgage offer or not as i dont want to waste more money paying tax on earnings

i didnt mention that i would expect to pay earnings of 3 months and i should of, this would be accounted for and thank you for mentioning it and i have to accept it as a cost to be built in

as for deception, actually i dont think it is, im simply setting up a limited company and paying myself a wage and paying the tax on it, should i be made redundant shortly after being offered the mortgage then so be it and who can predict the future anyway so what is wrong about this idea?

in any case, if i wasn't being so penalised for working so hard for myself because there are no jobs worth doing in my industry i wouldn't even be here trying to work this mess out would i? so have some bloody respect for those that are struggling in the same situation because there's thousands of people out there with families in the same boat we're not all lucky to have the same start in life are we