The taxman has entered into an arrangement with the UK mortgage lenders to exchange information. From 1 September 2011 HMRC has been giving mortgage lenders details of known income in relation to would-be borrowers. At the same time the taxman can get information from the mortgage lenders about the declared income of the would-be borrowers.
The Mortgage Verification Scheme is an agreement between Her Majesty’s Revenue and Customs; the Council of Mortgage Lenders and the Building Societies Association. Where mortgage lenders believe the evidence of declared income is inadequate, and therefore suspects a potential mortgage fraud, they will send the taxman details from the mortgage applications via a computer system. HMRC will cross check the income details declared to the mortgage lender against information held on the HMRC computer system – including that picked up from tax returns and accounts. It will then tell the lenders whether or not the details match up.
The taxman is also going to use the information received from the mortgage lenders in looking at its own risk assessment processes. HMRC has set up a special unit to deal with the Mortgage Verification Scheme. This means that HMRC has now got an additional source of third-party information to use when carrying out its risk assessments, or in the middle of the tax investigation.
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