HM Revenue and Customs (HMRC) have announced that the Mortgage Verification Scheme (MVS), which was developed in co-operation with the Council of Mortgage Lenders and the Building Societies Association and run as a pilot scheme in March 2010, is now fully operational.

Under the MVS, mortgage lenders send details of borrowers to HMRC, who cross-check the information against income disclosed on tax returns.

HMRC also supply information to the lenders as a result of this process. It is considered that the MVS will act to curb mortgage fraud and may lead to £1 billion of extra tax being recovered on undeclared income.

As far as obtaining an accountant’s reference regarding income goes, the Institute of Chartered Accountants in England and Wales has recently advised its members that where a lender is asking for an accountant’s opinion or report, on pre-printed forms, on whether the client will have sufficient income to service a proposed loan, firms should explain to the lender that they are unable to provide such an opinion and are ‘unable to report in positive terms on future income or future solvency’ and also that ‘no amount of enquiry can provide accountants with the assurance needed to enable them to confirm that a client will have sufficient income to service a loan or other obligation’.