Mortgage Verification Scheme

As from !st September Lenders will be able to pay HMRC £14 +VAT for a service, which presumably will confirm Income of the borrower.

Is this cotrary to DPA ?

Will this be extended to Agents for "other" services?

Having read the blurb it appears that HMRC are charging lenders for them to report what they think are "dodgy" applications.

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Fidget | | Permalink

This was mentioned a couple of weeks ago by David Winch. See:

http://www.accountingweb.co.uk/group-thread/new-measure-against-mortgage-fraud

davidwinch's picture

Agents

davidwinch | | Permalink

I don't read this as having anything to do with tax agents.

It is not contrary to the Data Protection Act, see s29 DPA 1998.

David

johnjenkins's picture

The article

johnjenkins | | Permalink

quite clearly states that the lender will have access to information. What, then is self-serve? When charging VAT surely one must assume a service is provided. If that service is providing information to a lender without the tax payers permission what next????? Lenders already have a way of "informing" on dodgy tax payers just as banks and we do.

So we can safely assume that HMRC will be privatised and any info will be charged for + VAT, of course.

 

davidwinch's picture

Disclosure of information by HMRC

davidwinch | | Permalink

There is longstanding statutory power for HMRC to disclose information for specified purposes, including for the purposes of potential criminal investigations - see s19 Anti-terrorism, Crime & Security Act 2001.

These powers are routinely used by police forces, DWP, local authorities etc to get information from tax files when investigating (for example) benefit fraud and other crime.

In the same way the same bodies obtain information from banks, solicitors, accountants, etc by way of production orders under s345 Proceeds of Crime Act 2002 where an investigation of suspected financial crime is underway.

David

johnjenkins's picture

David,

johnjenkins | | Permalink

with respect you have missed the point. Since when has HMRC been allowed to disclose information to a bank/lender without the tax payers authority? The other way round - yes.

Let's look at it another way. Lets say lenders don't bother with Accountants figures any more as they have access to HMRC's. Say 500,000 mortgage applications in a year at £14 + VAT a time.

That's £8.4M. Lets say processing 10 an hour, needs roughly 30 operatives per annum at salary of say £20K. Doesn't need much working out does it?

Now look at what income self-serve will bring in!!!!!!

davidwinch's picture

Since the 2001 Act

davidwinch | | Permalink

John

The 2001 Act to which I referred allows HMRC to disclose information without the taxpayer's authority so long as the purpose is related to crime or suspicion of crime.  The wording in the section includes "for the purpose of facilitating a determination of whether any such investigation or proceedings should be initiated".

So the HMRC confirmation (in response to a request from a bank / lender) that the applicant's information regarding his income is not inconsistent with data held by HMRC is information facilitating a determination of whether the application was, or may be, fraudulent (or whether the tax returns are fraudulent).  If there may be a fraud then a criminal investigation (arguably) should be initiated.

However the plan as announced is that requests should only be made to HMRC where the bank / lender suspects there may be a fraud.  It is not the plan that requests should be made to HMRC in respect of, for example, every application from a self-employed person.  That sort of routine disclosure by HMRC would not be covered by s19 of the 2001 Act or s29 of the DPA 1998.

David

johnjenkins's picture

So why is there

johnjenkins | | Permalink

a charge then??????????????

Surely if fraud is suspected there cannot be a charge. Lenders would just offer the information to HMRC, then it would be up to them to initiate an investigation.

This has nothing to do with fraud it's the start of HMRC charging for access to it's services.

davidwinch's picture

Charge

davidwinch | | Permalink

Surely the charge by HMRC is meant to be a contribution to the cost of them checking their records to assist the lender by protecting him against fraud.

I cannot see HMRC charging, for example, to respond to correspondence, or allowing taxpayers to file tax returns using HMRC website, or issue a revised PAYE coding!

David

P.S.  Thinking about it, the lenders will probably just add a term in their standard application forms by which the applicant (by signing the application form) automatically gives his permission for HMRC to disclose to the lender information about his tax affairs.

johnjenkins's picture

David,

johnjenkins | | Permalink

you have just blown your arguement clean out of the water.

If, as you previously said, this will only be for a handful of cases where lenders can't verify income or suspect fraud, why the need for re-drafting application forms?????????

You are right lenders are changing their application forms so we can safely assume, as long as the £14 +vat is paid (how much do some Accountants charge for references???) eventually all applications will be verified by HMRC.

Look at it another way. HMRC need money, so where better to get it than from commercial outlets - more to come - David, just wait when Madam goes and Michael gets his feet well under the table.

Steve Holloway's picture

So what?

Steve Holloway | | Permalink

Mortgage enquiries are a PITA and more often than not require me to get a SA302 from HMRC ... so why not cut out the middle man? I don't charge for the service directly but if I did then it would be more than £15 so that sounds quite good value.

As for charging for other services ... well I guess they would struggle to charge taxpayers for trying to fulfil their statutory obligations. This is clearly not the case here and strikes me as entirely reasonable (I am a tax payer too!).

 

By the way ... one ? is enough.

 

johnjenkins's picture

I agree

johnjenkins | | Permalink

let's cut out the middle man. I'm fed up with doing references then sending accounts then SA302's etc. etc. I have no qualms with lenders going direct to HMRC for confirmation of income, but let's not disguise it as "suspected fraud".

As for more than one ? that's just to get your attention to the fact that most Accountants charge a lot more than £14 + vat for a reference, purely because of the time involved.

As for charging for other services - someone, somewhere is already working on the hows and the how much. It will probably be on a similar basis to how Companies House charge for their services.

davidwinch's picture

Out of the water?

davidwinch | | Permalink

John

I don't think I have blown my own argument out of the water, as you put it.  It is an everyday occurrence in business to write in standard clauses which are not expected to be required in the vast majority of cases.

It is a simple matter for lenders to add a sentence or two to their standard forms to cover the possibility that they may contact HMRC.

David

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