Mortgage applications could come under scrutiny from HMRC following the launch of a new scheme designed to tackle fraud.
Under the Mortgage Verification Scheme, which comes into effect on 1 September, lenders can choose to pass mortgage applicants’ details on to the tax authority for additional checking.
HMRC will then compare income details declared to lenders against information provided in income tax and employment returns and, should the information not match, applicants could be the subject of an investigation.
Any mortgage lender can choose to refer an application but they will need to pay £14 plus VAT to cover HMRC’s costs.
Lenders will only be able to refer applications where they reasonably suspect, following
their own rigorous checks, that mortgage fraud may be taking place.
Paul Smee, Director General at the Council of Mortgage Lenders, said: ‘Lenders have found during the pilot that the scheme has been very useful in helping them to lend responsibly.
‘It has helped them to avoid lending in some cases where there is a risk of fraud, at the same time as giving them confidence about the borrower’s credentials in some cases that they might otherwise have felt compelled to refuse.’
Colin Barclay, Assistant Director, HMRC Risk and Intelligence Service, said: ‘HMRC are determined to tackle fraud wherever we can. The Mortgage Verification Scheme is an unprecedented opportunity for HMRC and lenders to work together to combat fraud in the mortgage industry.’
The scheme was first announced in the 2010 March Budget and is intended to prevent mortgage applicants overstating their income in an attempt to borrow more money.
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