Source of funds - sorted before house offer?

AskAsk

grumpy_codger said:

AskAsk said:

 you need to show where the money comes from.  so if it comes from your sole trader business then you will need to produce HMRC tax returns over the last 3 years to show your annual income.

Three years show nothing if someone is buying for cash saved over decades. IIRC my solicitor wanted only 3 last payslips, but I added P60 just in case.

then he would have a problem if it is all cash and no tax returns and rightly so.

AskAsk

RHemmings said:

grumpy_codger said:

I don't think that any solicitor would want to trace funds 5 years back unless they see anything looking really suspicious during the recent months. My worst experience was with the one wanting 2 years - and I had dozens of accounts with various banks and BSs, including almost £100K in regular savings accounts. Finally she agreed to 1 year, but the purchase fell through because of some other reason.

Next time the first question I asked a new solicitor was how many months of history they wanted (explaining why and saying that, generally, I had nothing to hide). And my current one wanted just 3 months.

My feeling is that solicitors pay more attention to cash buyers. With a mortgage, even a small one, this can be easier.

I was asked for accounts going back 7 years. In my case, some of the funds were overseas. I had received some of my inheritance, and had transferred funds from overseas to my UK account. Both chunky sums. There was no problem in the end, but I was asked. 

The OP probably doesn't have the same situation as me. I just wanted to point out my example of being asked for accounts beyond 5 years. 

I was simply asked to give access to my bank accounts via the ALM app and to explain where I got my wealth from.  So the time isn't always the same.  It all depends on the individual situation and the solicitor involved as to what they think is needed for the situation at hand.

AskAsk

sidneyyoungblood said:

Thanks for all the comments... would it be possible to try and get the paper trail sorted before making an offer on a property ?  I phoned a couple who said they cant do anything until I find a property  , is this correct ?( Is it a convergence solicitor I need.)

it's because the whole point of ALM checks is that it is individual specific so until the solictitors see your situation and can assess all the data presented, they won't know what exactly is needed to pass you.  so until you find a property and instruct them for the conveyancing work, they can't advise.

you need a solicitor that will deal with property purchase, a conveyancer.

Hoenir

sidneyyoungblood said:

Issue is that I have been chasing interest rates for the last 5 years going through around 10 different banks accounts sending partial amounts to keep under the FSCS , all the funds have come from my soletrader business selling online ( no cash deposits ) .. 

Hopefully you've retained 6 years worth of accounting records should the HMRC decide to conduct a random audit of your business affairs. How much cash have you accumulated? 

grumpy_codger

AskAsk said:

grumpy_codger said:

AskAsk said:

 you need to show where the money comes from.  so if it comes from your sole trader business then you will need to produce HMRC tax returns over the last 3 years to show your annual income.

Three years show nothing if someone is buying for cash saved over decades. IIRC my solicitor wanted only 3 last payslips, but I added P60 just in case.

then he would have a problem if it is all cash and no tax returns and rightly so.

And what about employees? Do you keep all your P60s for decades? None of the solicitors I dealt with (three in the last 2-3 years, different companies)  wanted to see them. And does it make any real difference if it's "all cash" or, say, 20% LTV?

sidneyyoungblood

Hoenir said:

sidneyyoungblood said:

Issue is that I have been chasing interest rates for the last 5 years going through around 10 different banks accounts sending partial amounts to keep under the FSCS , all the funds have come from my soletrader business selling online ( no cash deposits ) .. 

Hopefully you've retained 6 years worth of accounting records should the HMRC decide to conduct a random audit of your business affairs. How much cash have you accumulated? 

yes I have kept all the records electronically and physical  .. nearly all my transactions have been online payments so can be tracked..
 I am a soletrader selling online .. would it be worth trying to do all the " tracking " before contacting a solicitor ... Also what is the best way to find a Conveyancing Solicitor 
 ..

AskAsk

Hoenir said:

sidneyyoungblood said:

Issue is that I have been chasing interest rates for the last 5 years going through around 10 different banks accounts sending partial amounts to keep under the FSCS , all the funds have come from my soletrader business selling online ( no cash deposits ) .. 

Hopefully you've retained 6 years worth of accounting records should the HMRC decide to conduct a random audit of your business affairs. How much cash have you accumulated? 

this is where i suspect HMRC are getting information from.  i think the solicitors will be forwarding information to HMRC if they think there is anything suspicious and needed reporting.

my solicitor explicitly said that he will need to report anything suspicious to the relevant authorities when he does the ALM and if such is the case, he will not be able to do any work on the property but that he can not tell me that he had reasons to be suspicious and have reported to the authorities as they have been instructed not to tell their clients.

user1977

AskAsk said:

Hoenir said:

sidneyyoungblood said:

Issue is that I have been chasing interest rates for the last 5 years going through around 10 different banks accounts sending partial amounts to keep under the FSCS , all the funds have come from my soletrader business selling online ( no cash deposits ) .. 

Hopefully you've retained 6 years worth of accounting records should the HMRC decide to conduct a random audit of your business affairs. How much cash have you accumulated? 

this is where i suspect HMRC are getting information from.  i think the solicitors will be forwarding information to HMRC if they think there is anything suspicious and needed reporting.

my solicitor explicitly said that he will need to report anything suspicious to the relevant authorities when he does the ALM and if such is the case, he will not be able to do any work on the property but that he can not tell me that he had reasons to be suspicious and have reported to the authorities as they have been instructed not to tell their clients.

If the solicitors suspect money-laundering then they need to report to the National Crime Agency (and then sit on their hands until they hopefully get an all-clear to continue - as you say, they're not allowed to tip off their client that this is happening).

Solicitors don't have an obligation to spot tax evasion and report it to HMRC.

AskAsk

grumpy_codger said:

AskAsk said:

grumpy_codger said:

AskAsk said:

 you need to show where the money comes from.  so if it comes from your sole trader business then you will need to produce HMRC tax returns over the last 3 years to show your annual income.

Three years show nothing if someone is buying for cash saved over decades. IIRC my solicitor wanted only 3 last payslips, but I added P60 just in case.

then he would have a problem if it is all cash and no tax returns and rightly so.

And what about employees? Do you keep all your P60s for decades? None of the solicitors I dealt with (three in the last 2-3 years, different companies)  wanted to see them. And does it make any real difference if it's "all cash" or, say, 20% LTV?

legally, you are meant to keep P60 for at least 6 years.  look at your P60 form and it will say this as HMRC can audit anyone at random, but in practice, i don't think it is that random and they will only audit when something has been raised with them about the individual.

solicitors seem to ask for payslips from my experience and not P60 as the payslip will give enough information and if they think they need the P60, they will ask for that.  but from my experience, they can ask for anything once they start the ALM as until they see all the paperwork, they won't know what is needed in full as everyone circumstance will vary.

i have heard of posts on here where there is stale mate because the solicitors want certain things and they are not available and the solicitors won't budge.

the solicitors will do more checks the more cash you are paying as they are obligated to look out for money laundering, so when there is a large cash amount, they will be more on their toes to explain that cash.

i find that their fees don't seem to reflect how long they take to do ALM checks as it can be very simple or very complicated and this doesn't seem to be reflected in the conveyancing cost, which tends to be standard.

AskAsk

sidneyyoungblood said:

Hoenir said:

sidneyyoungblood said:

Issue is that I have been chasing interest rates for the last 5 years going through around 10 different banks accounts sending partial amounts to keep under the FSCS , all the funds have come from my soletrader business selling online ( no cash deposits ) .. 

Hopefully you've retained 6 years worth of accounting records should the HMRC decide to conduct a random audit of your business affairs. How much cash have you accumulated? 

yes I have kept all the records electronically and physical  .. nearly all my transactions have been online payments so can be tracked..
 I am a soletrader selling online .. would it be worth trying to do all the " tracking " before contacting a solicitor ... Also what is the best way to find a Conveyancing Solicitor 
 ..

there is no harm in your trying to get everything together before you start the process.  you need to google convenyancing solicitors in your area.  some people choose solicitors that are not local but I prefer to instruct a solicitor within my district.

read their google reviews to see what other people have said about them.  that is a helpful way to avoid the bad ones.

the best thing for you to do is to think from someone else's perspective, what would they want to see as proof of where you got that money from.  pretend someone is asking you this and you had to prove it, what paper trail would you produce to answer this question as that is likely to be what the solicitors will be asking when you do instruct them.