Wednesday, 24 June 2015

Mortgage Referrals and Tax Investigations

HM Revenue & Customs, the Council of Mortgage Lenders and the Building Societies Association came together in September 2011 to launch the Mortgage Verification Service.

Where a mortgage applicant has been unable to supply adequate evidence  of income, the mortgage lender can approach HM Revenue & Customs and ask for verification of the income. HM Revenue & Customs checks the tax returns received and employment data for the mortgage lender, but also risk assesses what it has seen. If the mortgage applicant has said their income is £50,000 on their application, but only declared £20,000 to HM Revenue & Customs, potentially either mortgage fraud is taking place or HM Revenue & Customs has a tax shortfall on £30,000 to pursue.

Since the service went live, the number of referrals made to HM Revenue & Customs has increased sharply:

2011/12  386
2012/13  1819
2013/14  5969
2014/15  7763

Great care should therefore be taken when completing the income details of a tax return.

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