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The Mortgage Verification Scheme (MVS) was officially launched on September 1, 2011, as a significant collaborative effort involving HMRC, UK Finance, and the Building Societies Association. This initiative was designed to tackle the growing issue of mortgage fraud, which poses serious risks to both lenders and the economy as a whole.
Under the Mortgage Verification Scheme (MVS), lenders can identify and flag suspicious mortgage applications. When a lender has concerns about an application, HMRC takes action by checking the applicant’s declared income. This involves comparing the stated income with the applicant’s PAYE (Pay As You Earn) records or self-assessment tax returns.
The scheme aims to enhance transparency within the mortgage application process, ensuring that all financial information provided by applicants is accurate and verifiable. By leveraging real-time data and fostering collaboration among key financial institutions, the MVS enhances the integrity of the mortgage lending process and helps to protect genuine borrowers from the consequences of mortgage fraud.
Since its inception, the number of referrals has surged dramatically—from just 1,819 in the first full tax year to 11,079 in 2023/24. In fact, receiving over 11,000 referrals each year has become the norm, peaking at 11,800 in the 2021/22 tax year. These checks not only aid lenders in determining who qualifies for approval, but they also provide HMRC with a wealth of potential leads for investigations.
Why the Spike? If you claim an annual income of £75,000 on your mortgage application, but your official tax records show a different amount, HMRC will notice this difference. They may flag it, leading to a detailed review and possibly an investigation.
HMRC does not share how many inquiries come from mortgage referrals. They say that revealing this information could hurt tax collection efforts. However, it’s important to know that these referrals can lead to big investigations, which can have serious consequences.
Don’t let a small discrepancy become a significant financial issue. Our team offers expert guidance on tax investigations, disputes, and VAT issues. For tax resolution or compliance, please contact Tax Accountant at 0800 135 7323 or email info@taxaccountant.co.uk for expert advice.