Mortgage Application Checks
September 2012 saw the launch of HMRC’s Mortgage Verification Scheme (MVS). It appears that lenders will be required to provide HMRC with details of income shown on borrowers’ applications and, unless this is handled properly, there could be some unnecessary tax investigations ahead.
The way that lenders ask prospective borrowers questions about their income has concerned me for some time. Their standard forms are often poorly-worded and ambiguous. They sometimes ask for income relating to tax years and sometimes for income relating to company financial years. Sometimes they want to know salary and dividend income, other times it’s the profit your company is making they are interested in. These forms can be a nightmare to interpret and certainly weren’t designed by accountants! And this could pose the threat.
The Council of Mortgage Lenders has said that the MVS will only be used where a lender suspects problems with the information appearing on the application form. Providing the lender with a full and detailed explanation should avoid this.