The new scheme to combat mortgage application fraud was launched on 1 September 2011. The mortgage verification scheme has been developed by HMRC, the Council of Mortgage Lenders and the Building Societies Association.
Mortgage lenders will only use the scheme where they suspect mortgage fraud, following their own checks. Where they have inadequate evidence of declared income and suspect fraud, mortgage lenders will send HMRC information from the mortgage application using a secure electronic platform. HMRC will cross check the income details declared to lenders against information provided in income tax and employment returns. It will then advise lenders whether or not the details match. Lenders will use this information in making their lending decisions.
Not surprisingly HMRC will use this information within their own risk assessment process to identify undeclared income. Any mortgage lender can use the scheme at a cost of £14+VAT per case.
Nobody should object to the principles of preventing both mortgage fraud and undeclared taxable income. However no doubt the system will be abused by both the mortgage lender and HMRC, the question will be how far this abuse goes. At minimal cost the mortgage lender has access to confidential information in respect of the taxpayer and HMRC has access to information in a format that was never intended to be submitted to HMRC. We all know how much of a hash both these organisations can make in interpreting legitimate information provided to them. Time will tell.
For further information/advice on this topic please visit www.wardwilliams.co.uk
Mortgage lenders will only use the scheme where they suspect mortgage fraud, following their own checks. Where they have inadequate evidence of declared income and suspect fraud, mortgage lenders will send HMRC information from the mortgage application using a secure electronic platform. HMRC will cross check the income details declared to lenders against information provided in income tax and employment returns. It will then advise lenders whether or not the details match. Lenders will use this information in making their lending decisions.
Not surprisingly HMRC will use this information within their own risk assessment process to identify undeclared income. Any mortgage lender can use the scheme at a cost of £14+VAT per case.
Nobody should object to the principles of preventing both mortgage fraud and undeclared taxable income. However no doubt the system will be abused by both the mortgage lender and HMRC, the question will be how far this abuse goes. At minimal cost the mortgage lender has access to confidential information in respect of the taxpayer and HMRC has access to information in a format that was never intended to be submitted to HMRC. We all know how much of a hash both these organisations can make in interpreting legitimate information provided to them. Time will tell.
For further information/advice on this topic please visit www.wardwilliams.co.uk
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