Mortage companies not liking cash basis accounting?

AdamPD

Hi all

I'm in my third year of self employment, with a view to try and remortgage after April 2016 when I'll have three years worth of accounts/tax returns behind me.

My previous accountant who did my previous two tax years, has since retired, so I'm trying to find a new one
I approached one accountant who told me:

"[FONT=&quot]Finally, I have heard that some lenders do not accept 'cash basis' accounts and want to see the accounts prepared under traditional accounting standards. [/FONT][FONT=&quot][FONT=&quot]I'm not sure if you could come across this but if so more work would be required on my part.[/FONT]"

Does anyone know if this is true? or have they run into it beforehand?

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csgohan4

AdamPD wrote: »

Hi all

I'm in my third year of self employment, with a view to try and remortgage after April 2016 when I'll have three years worth of accounts/tax returns behind me.

My previous accountant who did my previous two tax years, has since retired, so I'm trying to find a new one
I approached one accountant who told me:

"[FONT=&quot]Finally, I have heard that some lenders do not accept 'cash basis' accounts and want to see the accounts prepared under traditional accounting standards. [/FONT][FONT=&quot][FONT=&quot]I'm not sure if you could come across this but if so more work would be required on my part.[/FONT]"

Does anyone know if this is true? or have they run into it beforehand?

[/FONT]

Basically more money to fleece out of you. Usually lenders want your SA302 and company director and financial reports. Not difficult to get.

AdamPD

Yea that last part made me think that.
Guess I'll keep looking for an accountant. :P

csgohan4

They are almost the same reports you submit to companies house to be honest, same figures, slightly different format. Probably not as detailed as CT600

Thrugelmir

What's the nature of your business?

cns06

Not sure I understand. Your annual return will show the basics for the accounting period. Sales, purchases, tax, PAYE, divs, depreciation etc etc. It covers the 12 month period of your FY. That's it.


Some lenders don't ask for the returns anyway.


All will ask for your SA302. Again your SA302 will only show income from divs, PAYE and interest. Any tax due and that's it. Again for 12 month period tax year.


There is no break down. The only people who will ask to see a break down of invoices and such like is the HMRC/VAT if they do an inspection.

AdamPD

@Cns06 I don't understand it either.

@Thrugelmir, I work as a contractor for two companies, have done for the past 3+ years now.
One's a british company the other, an American one.

csgohan4

cns06 wrote: »

Not sure I understand. Your annual return will show the basics for the accounting period. Sales, purchases, tax, PAYE, divs, depreciation etc etc. It covers the 12 month period of your FY. That's it.


Some lenders don't ask for the returns anyway.


All will ask for your SA302. Again your SA302 will only show income from divs, PAYE and interest. Any tax due and that's it. Again for 12 month period tax year.


There is no break down. The only people who will ask to see a break down of invoices and such like is the HMRC/VAT if they do an inspection.

My Broker and lender asked for company reports in addition to the SA302, if you want to cover yourself get them all before mortgage app so you don't suddenly get stressed trying to get your Accountant to do it in 1 day. I had 2 years of SA302 as well. They want to ensure your company isn't losing money.

densol_2

csgohan4 wrote: »

My Broker and lender asked for company reports in addition to the SA302, if you want to cover yourself get them all before mortgage app so you don't suddenly get stressed trying to get your Accountant to do it in 1 day. I had 2 years of SA302 as well. They want to ensure your company isn't losing money.

The OP said he is self employed - not a company. Two different legal situations.

To be honest OP - there is no benefit in running a cash accounting system in my view unless you are a business that has cash flow issues so only want to account for money when it is received rather than when invoiced. Plus you have to run simplified expenses and can't get capital allowances.

minimike2

densol wrote: »

The OP said he is self employed - not a company. Two different legal situations.

He didn't state if he is a sole trader or a LTD company though - Regardless of people who think they are not self employed if they work for their own LTD company, they are, so the advice to get accounts as well as SA302's ready is sound advice.

If LTD there is very good reason to provide accounts. Not so much for a sole trader but it doesn't hurt to have them and a lender might still ask to see them if they feel like it.

AdamPD

Sorry for the lack of information, yea I'm a sole trader, not a LTD company.
I basically record everything coming in on a spreadsheet
The previous accountant didn't ask to see anything, no receipts or such, all she asked for was the figures (what came in, what went out) and then she submitted the tax returns and provided the accounts.