Undeclared income?

GrumpyTeacher

I have a friend (genuinely, not me!) who is self employed and receives three regular incomes every month. As we are going through the mortgage application saga at the same time we were chatting. He has an accountant so all is above board except one of his payments hasn't been declared to his accountant.

Could he get in trouble?

HappyMJ

emmajanekitchen wrote: »

I have a friend (genuinely, not me!) who is self employed and receives three regular incomes every month. As we are going through the mortgage application saga at the same time we were chatting. He has an accountant so all is above board except one of his payments hasn't been declared to his accountant.

Could he get in trouble?

With who? If he hasn't declared previous years income then maybe with the HMRC if it's for last tax year then there is still plenty of time to declare it with no tax penalty.

Wh05apk

Yes, all income must be declared for tax purposes.

GrumpyTeacher

I completely agree but was just querying whether if they saw an income on a bank statement which didn't show on an accountants file a) would they decline him and b) could they tell HMRC?

I'm just worried he may get in trouble tis all.

HappyMJ

emmajanekitchen wrote: »

I completely agree but was just querying whether if they saw an income on a bank statement which didn't show on an accountants file a) would they decline him and b) could they tell HMRC?

I'm just worried he may get in trouble tis all.

No and No. The payments could be anything.

GrumpyTeacher

So would they just be checking that the payments he's quoted (declared to accountant) show on the bank statement? They wouldn't query anything additional? He's only had to show last 3 bank statements & last 3 years accounts.

Thrugelmir

emmajanekitchen wrote: »

I completely agree but was just querying whether if they saw an income on a bank statement

If the money is a regular remittance from an obvious unrelated party source. Then an underwriter may well err on the side of caution and suspect the worst, i.e. undeclared income / money laundering. On that basis decline the application. Simply not worth the hassle to follow up on.

comeandgo

I'm really surprise his accountant has not asked what the extra income is, but if it is undeclared income then your friend could be in for some investigating from HMRC if they ever become suspicious.

Edit - I read your post too quickly and thought it was a recurring depost every month that was not declared, but only one payment out of many years of trading? Not so serious.

GrumpyTeacher

Ill have a word with him, thanks. It'll show up on his last 3 bank statements. I'm not sure how long he's had it coming in... If its a recent addition could he not say that & then declare it on his next tax return? I'm not sure how long he's had that income for.

dunstonh

I completely agree but was just querying whether if they saw an income on a bank statement which didn't show on an accountants file a) would they decline him and b) could they tell HMRC?

Yes they can report it and should report it. Banks are required to submit a report for money laundering, benefit fraud and tax evasion. However, so should the accountant.

Wh05apk

dunstonh wrote: »

Yes they can report it and should report it. Banks are required to submit a report for money laundering, benefit fraud and tax evasion. However, so should the accountant.

...............and the mortgage broker, and any "regulated" person on here if they are able to identify the person, so I assume we are talking hypothetically?