Lenders start sharing personal details with the taxman

by Aaron Strutt

Sep 09 2011

Under the terms of the mortgage verification scheme borrowers could trigger a tax investigation by applying for a mortgage, after the introduction of new data-sharing rules.

The scheme will allow Britain's biggest mortgage lenders to exchange personal information on loan application forms with the taxman.

It has been designed to help banks reduce the risk of fraud but, Mike Warburton at Grant Thornton the law firm, told The Sunday Times: “It is likely that many people who legitimately declare a certain level of income on their mortgage application, may be unfairly investigated for tax fraud.”

Borrowers with offshore income, those who receive a bonus and the self-employed could be investigated because details about their income, do not match the records at HM Revenue & Customs (HMRC).

Mortgage lenders are not obliged to tell borrowers that they are asking HMRC to check their personal income is correct. The Council of Mortgage Lenders says: “By virtue of an application being submitted, the customer agrees to have details checked.”

Aaron Strutt, a broker at Trinity Financial, says: “We can help our clients to choose the right bank and advise what is required to qualify for a mortgage. Many of our clients are either self-employed or paid large bonuses.”

During the 2010/11 tax year there were 72,520 investigations opened and there were 148 convictions, according to HMRC.

September 9, 2011