Self Cert Mortgage Cull means regular bookkeeping is imperative for the self employed

Self certification mortgages look like they are about to fizzle out as anxious lenders decide borrowers without a robust proof of income are not worth the risk.A self certification mortgage involves borrowers vouching for themselves that they can afford the repayments, sidestepping the need to prove their earnings a popular option amongst the self employed where their income may be unreliable or irregular.

Now however, it seems that self employed workers must have proper sets of accounts in readiness if they want to get a mortgage which means regular bookkeeping will become vital.
Because previous borrowers inflated their income so that they could secure larger loans, lenders are now nervous that the self certification customers will struggle to meet their repayments in this poor economic climate, mainly because their income projections were based on normal business conditions, and these conditions are obviously now far from normal.

To add to the predicament faced by self employed business owners, the Financial Times has claimed that the majority of lenders are now basing their calculations on the lowest total of three years’ accounts where previously they would work on the highest total.

The answer? As well as being able to support any credit or mortgage applications, the benefit of regular bookkeeping and having proper accounts prepared will help business owners monitor trends including things like changes in turnover, time taken by customers to pay and rising costs of materials. Armed with this sort of information, the self employed business owner will be better able to predict the ease at which they can pay off the mortgage or loan, and will be able to decide whether it is worth the risk in the first place.

Increased late filing penalties for annual company accounts

The penalties for the late filing of annual company accounts rose as of 1 February 2009.

The Companies Act 2006 provides that all companies must deliver annual accounts to the Registrar of Companies by the due date and that a late filing penalty will be payable if the accounts are delivered late. These penalties were originally introduced in 1992 to encourage directors of limited companies to file their accounts on time as this statutory information is required for the public record.

The February 2009 changes include an increase in penalties generally, a faster rate of increase in the level of the penalty for companies filing more than one month late and a doubling of the penalty for anyone filing late two years in a row. Penalties now run to:

· £150 for filing up to a month late;
· £375 for 1-3 months;
· £750 for 3-6 months and
· £1500 for more than 6 months late.

Flat management and dormant companies should note that these penalties apply to them as well as trading companies.

It is vital that you make sure you allow enough time for your accounts to be filed within the period stated in the Companies Act, so ensure your records are given to your bookkeeper or accountant to prepare in plenty of time, bearing in mind their busy periods. You should also be aware that penalties will not be waived for papers that are delayed in the post, so allow ample time and do not leave it until the last minute to send your paperwork off.