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New scheme could spell the end to hidden income
Home owners, who are not being entirely truthful to mortgage lenders regarding their incomes when filling out application forms, could, from today, find their lender has decided to make staff at HMRC aware of any discrepancies.
At the HMRC Colin Barclay, the Assistant Director, of 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 Mortgage Verification Scheme comes into force from the 31st August and means that mortgage lenders can choose to pass on applicants’ details for additional income checking. The scheme was first mentioned during 2010’s Budget, it is hoped that it will go some way to put a stop to mortgage fraud. Mortgage applicants can download forged pay slips and falsify almost anything related to their stated income. HMRC will be looking to see why the figure on their tax returns does not match with their stated income and they could face an investigation.
HMRC and the Council of Mortgage Lenders have set up the scheme with the Building Societies Association. They say that the scheme will “help HMRC to risk assess whether the information it has been given on applicants’ tax affairs is correct”.
A spokesman at the CML has said that lenders using the system as part of a pilot project had successfully weeded out potentially fraudulent applications because of the new system. “It works both ways though,” she said. “There are people whose mortgages have been approved because of the checks - they can make lenders more confident.”
The voluntary scheme should be limited to applicants whom lenders reasonably suspect are trying to carry out mortgage fraud. It will cost them £14 plus VAT to refer the applicants to HMRC.
CML director general Paul Smee 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.”
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