Q. I recently heard mention of some sort of new mortgage policing programme. What exactly is it?
ASK THE EXPERT
A. You’re almost certainly talking about the new Mortgage Verification Scheme. Developed jointly by HM Revenue and Customs, the Council of Mortgage Lenders and the Building Societies’ Association, this is a new scheme designed to combat mortgage fraud.
Basically, the scheme revolves around the sharing of data between lenders and the taxman, the idea being to bring an end to the time-honoured custom of overstating your income to one, while understating it to the other.
At the time of its launch last September, much was made of the fact that the new scheme would primarily help mortgage providers to lend more responsibly. The director general of the Building Societies’ Association was fulsome in his praise. “This,” he said, “is an excellent example of HMRC working proactively with business to provide a valuable service. Mortgage fraud is a cost to the industry and ultimately the consumer – so this scheme benefits both lenders and consumers alike.”
It was also claimed that use of the scheme would be limited to those cases where lenders, following their own checks, were still unhappy with the evidence of declared income, and consequently suspected that fraud might be taking place.
Nevertheless, call me cynical, but I can’t help suspecting that in these straightened times, with the Government seriously strapped for cash and constantly looking for ways of squeezing more tax out of anyone and everyone, all the talk of responsible lending and the hand-ringing over mortgage fraud is actually a bit of a smokescreen. Ultimately, I wouldn’t mind betting that the main beneficiaries of this scheme will actually be…the Treasury.
Tellingly, the launch press release included a sentence which rather let the cat out of the bag. “As well as aiding mortgage fraud prevention,” it said, “the scheme will help HMRC to assess whether the information it has been given on applicants’ tax affairs is correct...”
So there you have it. How long will it be, I wonder, before the small print changes, and instead of checks only being initiated by suspicious lenders, it becomes just another stealth weapon routinely deployed by the taxman?
Meanwhile, of course, anyone submitting a mortgage application would be well advised to check the information given about past incomes and outgoings against their tax returns for the corresponding years…