Santander nightmare, do I have another option?

juleszoemay_2

Hi Dave

I may not have explained properly, we have completed on house B (28 June) and moved in. House A is currently empty (since 3 weeks ago) and sold STC going through smoothly -hopefully

So your option isn't an option as we've completed on the new house

Thanks
J

Eellogofusciouhipoppokunu

juleszoemay wrote: »

When my husband was a sole trader he had tax bills of 25-30k which really were ridiculous.

I have to admit that I find it astonishing that someone will put themselves at such risk financially, buying one house before they have sold the other, just because they don't want to pay an ERC of just £5k, especially when that person earns so much money that they had an annual tax bill of £25k to £30k and no hardly has any tax to pay at all and so assumably has a huge tax free income at their disposal.

It just doesn't add up.

juleszoemay_2

The reason we bought without selling was because the developer gave a £35k reduction on the price IF we completed within two weeks. If we had waited to sell our house we'd have lost the deal and the house as it was the only one on the site we wanted.

We've not put ourselves at risk for 5 grand! We we're advised incorrectly that we could move our mortgage to the new house when the old house completes, that's all. We'd pay the £5k to put the new house mortgage with another lender but we were never advised of the 6 month ownership rule, I've only found this out by speaking to a mortgage adviser I used to work with. That's the problem! Clearly we earn enough to get a mortgage... That's not the question I was asking

I never realised forums could be like this! :-(

juleszoemay_2

Btw, my husband earned a lot more as a sole trader and when there was more work, he owns a garage. He's hardly Donald Trump! He pays 20% corporation tax on the companies profit and takes £6k salary plus £12k directors loan, I'd hardly say £18k was earning a lot.... Times are hard, economic climate is not good.

juleszoemay_2

Thanks Neil, I was beginning to think I was the victim of bullying (out of school)

Your reply is appreciated, I know we're not doing anything illegal. We aren't that sort of people

Thanks again

Eellogofusciouhipoppokunu

Neilhmtn wrote: »

This is absolute nonsense. What the OP has described is someone drawing down on what they have effectively lent to their own company. All small (technically called "close") companies do this, it isn't avoidance, HMRC will never clamp down on it, and HMRC will not be going back six years for unpaid tax for this reason.

There is the disadvantage that lenders won't consider the drawdown to be income - because it isn't - but no mortgage lender will give the director's loan account a second thought.

Yes, nonsense.

http://www.guardian.co.uk/money/2012/jun/22/tax-avoidance-loophole

Of course nothing in tax is quite as simple as the example above. HMRC has strict rules about EFRBS, and has put in place legislation to catch "disguised remuneration". Many directors do, of course, repay the loans and pay their tax in full.

Many accountants refuse to enter into such "aggressive" tax avoidance schemes, on the basis that they carry a high risk that HMRC will later shut them down. "They tend to be set up by very, very clever people, mostly specialist tax lawyers. But some are so aggressive, and in this business, our reputation is everything," says Richard Godmon, partner at Menzies, an accountancy firm that specialises in owner-managed businesses (who is not the anonymous expert quoted above).

"Only a tiny percentage of clients are prepared to enter into aggressive strategies. When we explain it to them, they say 'I'd rather sleep at night.' They don't want these schemes to come back and haunt them in three or four years' time."

juleszoemay_2

This is not relevant, my husband is not borrowing money from the business, neither does it have anything to do with EFRBS.

The business was valued at £50K at the time of making it a Ltd company, valued on equipment, customer base etc etc. Therefore the Ltd company OWES him as an individual £50k, but didnt have the cash in the bank to pay for it at the time, therefore this is how he is being paid back for building up the company.

Its got nothing to do with pensions, or the company loaning him money! Its money that is owed to him.

Hopefully this clears things up

juleszoemay_2

would you suggest he should have gone limited and not taken anything for building up a business over 10 years? HE was advised to go Ltd by his accountant, because of the turnover of the business.

TBH, I dont know what point you're getting to. I didnt ask for a spanish inquisition, I was asking for advice on obtaining a mortgage without owning the house for 6 months!

juleszoemay_2

I have enough self control not to reply how i'd like to. In future please note sarcastic comments should be saved for Facebook

juleszoemay_2

Are you saying he should have sold all the business' assets, got the money, then started the new business from scratch?

The turnover of the business was increasing year on year and going ltd was advised by a reputable chartered accountant. Clearly the business had a value at this point, I'm assuming you're saying if this was you, you would have valued it at zero!