company director and mortgage

ConfusedLady

Hi,

OH is just applying for a mortgage and he's come up against a hurdle.

Is a business financial year the same as a tax year?

He was asked to submit two years accounts and an accountants reference. Unfortunately our accounts are done by an accountant that isn't certified but we are having them countersigned by a certified accountant. So this hurdle should hopefully be resolved.

They then asked about SA302's, OH only has one SA302 for the financial year ending September 2012. Our accountant explained that the accounts for the period ending September 2013 will be on the self assessment submitted January 2015, although we have submitted it early to support the accounts for the period ending September. The mortgage company are now saying they can't accept the SA302 for tax year ending 05th April without our accounts for that year (2014). Our year end isn't until September so I'm really confused.

I understand the need for accounts and SA302 but don't understand why they are saying they if we provide the SA302 for 2014 they want the accounts for 2014.

Mortgage_Mark_2

No, if his business was incorporated/founded 1st Jan, his business year runs 1st Jan - 31st Dec.

Tax year begins 5th April. SA302's will be for a tax year and will therefore span two business years in that example.

Lenders should realise that you won't have accounts for a business year that has ended up to about six months ago as a rule, ask your broker (if you're using one) to contact the lender and sort it out.

ConfusedLady

Hi, Thanks.

The accounts were provided for year ending September 2012 and September 2013.
When they asked for the SA302 we supplied the one for tax year ending April 2013.
Slightly more dividends were taken for September 2013 than September 2012.The first query was that the SA302 didn't match the September 2013 accounts which the broker explained that it wouldn't match because the SA302 for tax year 2013 wouldn't match because it related to year end 30/09/2012 (SA302 April 2013 matches accounts September 2012). The underwriter couldn't get his head round this so the application is now with a senior underwriter.
The accountant processed OH tax return for period ending 05th April 2014 a couple of days ago to prove it would match accounts for 30th September 2013.
The mortgage broker spoke to the senior underwriter today to say we should have the SA302 to support the September 13 accounts next week and to check that would then resolve the issue. This is when the senior underwriter informed the broker there is ' no point forwarding the SA302 for tax year ending 05th April 2014 without the accounts for 2014!
The accounts submitted for September 2014 and dividend drawn for 2014 will show on tax return 05th April 2015 so I'm a little confused.

Thrugelmir

The last prepared accounts are already 7 months old. So of little use in making any financial appraisal.

amnblog

The accounts show the lender the general health of the business, profit and cash. Also, things like directors loans and business debt.

The SA302s tell the lender how you take income from the business.

They are difficult aspects of the same consideration.

ConfusedLady

Thanks,

If the accounts are seven months old are you saying it is best to find our next house say October/November when the accounts are being submitted to companies house?
If 7 months old is the issue do all company directors now need to time house buying remortgaging with year end?
Amnblog I think I understand what you are saying Re the SA302 I assume you mean how much income from salary and how much from dividend.
If we have provided accounts for September 12 and September 13 and by next week provided both SA302 what more can be done? I assume we wont get a mortgage until after the next set of accounts but then we wouldn't have a SA302 for that set accounts until April 2015.

amnblog

Difficult to comment without knowing the full case.

Assuming there is nothing concerning the lender about the figures, you have two years trading, and the lender will work on two years figures, disparity of tax and trading year is not a problem.

It may be something in the accounts they don't like.

ConfusedLady

Hi Amnblog,

They haven't informed the broker it's something in the accounts do they usually?
The key thing they have said is accounts September 2013 does not match tax return 2013 which we and our accountant have confirmed to the broker that tax return 2013 will not match accounts 2013 because our year end 2013 will show on tax return 2014. The underwriter couldn't understand this which is when he asked for tax return 2014 which we are just waiting on but the senior underwriter now is saying that if we provide tax return 2014 they want accounts 2014 to prove the dividends drawn in 2014 match accounts 2014. The dividends draw that show on tax return 06th April 2014 are those declared end September 2013.
Very, very confused. Think it's going to be bye, bye to this house but I'm now worried that if we were to apply in a few months say after 2014 accounts that we will be in the same position because they will be asking for an SA302 to match 2014 but this wont be produced until after 06th April 2015.

amnblog

Who is the Lender here?

ConfusedLady

Is there a particular lender that doesn't deal with self employed to often? I don't want to write it on here but will PM if useful to know.

Thrugelmir

To expand on my previous comment. May have something to do also with the proportion of income that's withdrawn as dividends as opposed to a regularly paid salary.