The Mortgage Verification Scheme (MVS) was launched on 1 September 2011 as a joint initiative between HM Revenue and Customs (HMRC), the Council of Mortgage Lenders (now part of UK Finance) and the Building Societies Association, in an effort to reduce significant mortgage fraud.

The MVS allows lenders to send details of mortgage applications to HMRC, when they are suspicious about the level of declared income. HMRC checks the declared income against the records it holds, whether via PAYE information or declarations made on self-assessment returns.

During the first full tax year of the MVS being in place, 1819 referrals were made.

During the last tax year, 2023/24, 11,079 referrals were made.

The number of referrals has been more than 11,000 for the last three tax years, hitting a high of 11,800 in 2021/22.

The graph below summarises the number of referrals HMRC has received since the MVS went live.

_{Source: HMRC}

HMRC’s background checks clearly help the mortgage lenders with their lending decisions, but the referrals also help HMRC identify potential investigation targets.

For example, if someone is declaring an annual income of £75,000 on their mortgage application, but their PAYE record or self-assessment tax return shows a lower figure, HMRC becomes suspicious and conducts a full risk assessment to see whether an in-depth enquiry is required to test the reasons for the discrepancy.

HMRC refuses to say how many enquiries have resulted from the mortgage referrals on the grounds that ‘disclosure would, or would be likely to, prejudice the assessment or collection of tax.’

It is inevitable that some of the referrals will have led to full investigations, which is where Independent Tax comes in. Our experienced team of former HMRC Inspectors stand ready to help if you have been caught up in such a situation.

If you require advice concerning a tax investigation, or other tax or VAT dispute with HMRC, then please get in contact by calling us on 0800 001 6686 or by email at info@independent-tax.co.uk for a no obligation consultation and for more information.

Independent Tax. Strong by your side and strong in your defence.