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Revenue income validation scheme set for autumn start

HMRC
HMRC: ‘Valuable intelligence’

HM Revenue & Customs has confirmed it is in advanced talks with the Council of Mortgage Lenders about introducing a scheme that allows lenders to verify income.

Money Marketing understands it could be launched as soon as three months’ time.

The previous Labour Government announced plans to set up a formal scheme in its March Budget. Panellists at a recent Money Marketing round table urged the coalition Government to press ahead with the plans. An HMRC spokesman says the scheme would have benefits for HMRC and lenders.

He says: “Lenders who suspect the income details on a mortgage application are fraudulent will be able to check whether the details provided match information supplied to HMRC, such as tax returns, for example. The scheme will assist lenders with their responsibility to verify mortgage applications, and it will provide HMRC with valuable intelligence about people who may be evading tax.”

A CML spokesman says: “This is not necessarily something we would see as a means of implementing income verification requirements that may emerge from the mortgage market review, it is essentially for fraud detection.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. death to the self employed plunged into a void of forever renting

  2. To clarify andrew, are you referring to those self employed who either couldn’t afford the mortgage anyway or who under-declare their earnings to the taxman?
    If they earned the money and paid tax on it then where is the problem?

  3. great, knowing how good HMRC are screwing up tax credit payments, and the months it takes to resolve, are we going to have lenders delaying applications now due to incorrect data being provided?

  4. Scott Taylor-Barr 20th August 2010 at 5:26 pm

    On a positive; a fully automated income verification system via HMRC could make mortgage transactions much quicker to process; with elctronic ID, credit history and income verification we move towards a very slick system indeed. It would be ashame if it was soley used as an anti-fraud messure.

  5. Andrew, your comments are so out of step of where we are as an industry at the moment. If you have a lender who will take anyones word for what they earn at the moment you must be working in a different business to the rest of us. I don’t even bother hunting for fast track, each and every client needs to prove their income one way or another and I won’t even submit an application unless I have that prooof on file.

    Placing business is back to where we were in 1994 , you need skill,solid relationships and lenders who trust you, without any of those three you are “singing in the wind”.

    Lets be positive, proving every clients income everytime is what most of us have been doing for the last two years anyway so any political/regulatory change is a little late and quite frankly, words for words sake, let them have their 15 minutes of fame, we still have to earn a living.

  6. I was the victim of a fraudulently
    filled in mortgage application form in 1989. Income stated to be £15,000
    when it was actually £6,000 !
    The speed of addressing this problem is breathtaking !

  7. Andrew you are in the wrong business, caring about one client’s means proving income. I my book fast tract, self certification call it what you like it’s your duty to lenders, new and existing clients to have proof of income on file including calculation where more than one source of income is being relied on, period. Would you lend your own money without satisfying your self that it will be paid back? Where is the problem?.

  8. It Is fantastic to see the industry coming together at least to denounce the last bastions of the so called good old days of getting their clients whatever they wanted as a mortgage.

    The industry has changed for the better, wake up and smell the coffee.

  9. What a confused set of comments, not once has the Data Protection Act been mentioned. To remind everybody it was passed by Parliament to PROTECT THE PEOPLE. It is not the duty of the empire building FSA (soon to decease) or the mortgage industry to interfere with it, to suit their requirements.

    Stop interferring with the RIGHTS of THE PEOPLE AND FIND ANOTHER WAY TO SATISFY THE REQUIREMENT.

    IS HMRC GOING TO CHARGE THE MORTGAGE INDUSTRY FOR THE SERVICE AND IF NOT WHY NOT. WHY. SHOULD TAXPAYERS FUNDS BE USED FOR SUCH A PURPOSE?

    OR LIKE THE DVLC, WILL HMRC SELL TO THE HIGHEST BIDDER OR SIMPLY SELL ALL THE INFORMATION ON THE OPEN MARKET.

    ALTERNATIVELY WILL THE MORTGAGE MARKET DEVELOPE A NICE LITTLE EARNER, SELLING THE DATA

    THE PROTECTION OF THE PEOPLE GOES FAR BEYOND THE REQUIREMENTS OF EITHER THE FINANCIAL SERVICE AND MARKETING ACTS AND THE INDUSTRY IT HAS ATTEMPTED TO DESTROY. .

  10. Christopher Bearfoot 24th August 2010 at 11:23 am

    1. Self Cert.
    There’s little need, if we’re honest, for this product. There will always be some clients who have need for more flexible underwriting terms – for example those who have not been self employed long but perhaps have a track record of working in the same industry as an employed person. The key here is to have lenders who are prepared to employ local mandate holders who have real discretion based on experience to approve loans outside of the standard criteria.

    2. Fast Track.
    There’s nothing wrong with this in principle, its down to how its put into practice. If an existing mortgage customer wants to move property, stay with the same lender and not increase his repayments, then fast track is a way of the lender just saying that its “business as usual”. After all, no lender I’m aware of would ever check income mid-way through a mortgage term to check ongoing affordability even though circumstances could have altered significantly (for example increased outgoings/reduced income due to starting a family).

    3. Data Protection.
    If the applicant agrees to the lender accessing the information – and since they are presumably providing bank statements, salary slips, letters from an employer etc. there’s no reason why this consent wouldn’t be forthcoming.
    As for the cost, I would agree that the costs of the system should fall on the lender & applicant rather than on the taxpayer.

  11. I think Chris Bearfoot has put it very well.

  12. Im with MJ Winfield. Privacy and protection of sensitive data are not worth trading for the convenience of the banking industry who for decades have robbed us all. In 17 years ive submitted several thousand mortages and not one single client of mine has ever suffered repossession or got into major arrears difficulties. A good broker will take all reasonable steps to confirm affordability not just for today but for the foreseeable future too. I don’t want to become an agent of the state assisting with spying on my clients and breaching their rights. The inland revenue do not pay me a penny for assistinbg them. Im not a fraud investiagtor, thats the job of the relevant authorities. If it transpires that a potential client is tryin to pull the wool over mey eyes I will politely show them the door. The lenders getting in cahoots with the HMRC is a blatant slap on the broker community’s face. Do they not trust the professionalism of those of us who have struggled through the last 3 years whilst 70% of our numbers have fallen by the wayside. I didn’t hang around through the worst recession in modern history to be treated like a potential criminal!!

  13. I run my own company ( just me! ). £15000 of my income is PAYE but the rest is via dividend.

    Does anyone know if this income database is just PAYE or whether it includes all income?

    Based on PAYE I earn very little. But including the dividend increases it 4 fold.

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