Is fraud propping up house prices ?

HAMISH_MCTAVISH

Also interestingly, can't find any mention of Branson using a car loan.

But it does appear he went in for some tax evasion....

Branson eventually started a record shop in Oxford Street in London. In 1971, Branson was questioned in connection with the selling of records in Virgin stores that had been declared export stock. The matter was never brought before a court and Branson agreed to repay any unpaid tax and a fine. Branson's mother Eve re-mortgaged the family home to help pay the settlement.

DervProf

HAMISH_MCTAVISH wrote: »

I'd love to see the answer to this one....

Technically, they may be. Just because they became very successful, doesn't mean they did everything by the book, and it doesn't mean they have to have a set of rules especially for them to live by. In fact, if truth be told, most of us have probably "bent the rules" a little in our lives, but it is a matter of degree. I probably sound like some sort of do-gooder or jobsworth. The fact is that I do know that people will do a bit of fiddling if they can get away with it. Maybe claim on expenses for a meal they didn't have, claim tax relief on clothing that was bought for a party, rather than for their work etc. It's wrong, but it's on a different scale to avoiding paying possibly thousands in tax, then going to a mortgage broker in the hope of getting a mortgage based on that undeclared income. It is something that many honest mortgage applicants should be concerned about, because when the property market gets going again, they may well end up losing out on a property purchase because a fraudster managed to put in a higher offer. That will have much bigger consequences than if the person they lose out to pockets a few quid every so often for a bit of beer money, instead of putting it through his books.

I'll say again, with the shortgage of property that we apparently have, turning a blind eye to mortgage fraud is grossly unfair on the (at the moment) majority who make honest mortgage applications.

DervProf

HAMISH_MCTAVISH wrote: »

Also interestingly, can't find any mention of Branson using a car loan.

But it does appear he went in for some tax evasion....

It appears that he paid the tax and a fine. OK, he didn't go to court. I'd say that was fair enough, it probably saved a lot of time and legal costs, and the tax man got his money. A common sense outcome. I do hope his mother obtained the re-mortgage honestly though.


BTW. I'm chuckling at CK's signature. :rotfl:

HAMISH_MCTAVISH

DervProf wrote: »

, if truth be told, most of us have probably "bent the rules" a little in our lives, but it is a matter of degree.

Really?

So fraud isn't fraud, unless it's applied to house purchase?

I probably sound like some sort of do-gooder or jobsworth.

No, you sound like someone whose distaste for high house prices is skewing their perspective.

The fact is that I do know that people will do a bit of fiddling if they can get away with it. Maybe claim on expenses for a meal they didn't have, claim tax relief on clothing that was bought for a party, rather than for their work etc. It's wrong, but it's on a different scale to avoiding paying possibly thousands in tax, then going to a mortgage broker in the hope of getting a mortgage based on that undeclared income.

So what you really mean is it's OK to fiddle your taxes, so long as you don't use the extra money to buy a house.

Thought so.

It is something that many honest mortgage applicants should be concerned about, because when the property market gets going again, they may well end up losing out on a property purchase because a fraudster managed to put in a higher offer. That will have much bigger consequences than if the person they lose out to pockets a few quid every so often for a bit of beer money, instead of putting it through his books.

I'll say again, with the shortgage of property that we apparently have, turning a blind eye to mortgage fraud is grossly unfair on the (at the moment) majority who make honest mortgage applications.

With the cost of mortgage fraud estimated at just one billion out of the 1200 billion mortgage market, I'd say your chances of that happening are beyond tiny, and well into virtually impossible.

Graham_Devon

Do you condone fraud then Hamish?

HAMISH_MCTAVISH

Graham_Devon wrote: »

Do you condone fraud then Hamish?

Nope.

But I do condone people seeking to exploit every legal loophole possible to minimise their tax obligations.

DervProf

HAMISH_MCTAVISH wrote: »

So what you really mean is it's OK to fiddle your taxes, so long as you don't use the extra money to buy a house.

Thought so.

Now you are trying to put words into my mouth. I did not state that it's OK to fiddle any taxes. Clearly it is not. I view things in varying shades, not just black and white.

Should the tax man discourage people from committing tax evasion on a small scale (by levying fines if caught). Yes. Should the tax man spend millions of pounds on inspectors who routinely check on every single self employed person to see if they are sticking a few quid in their back pocket ? Not really.

Should the mortgage lending industry talk to the tax man to discover an applicant's true earnings in order to make sure that fairly serious fraud isn't taking place ? I'd say yes, the cost of doing so would be money well spent. I'm sure checks are made to make sure i don't exceed my yearly ISA contribution limit, so why can't a check be done to verify someone's true income ? That would be fairer on those who do declare their income to the revenue properly, and it might encourage those with aspiration to buy a house with a mortgage to pay more tax in order to be able to show enough income to get a mortgage.

Property will still change hands, but more of it will end up with people who have done things "above board". What's wrong with that ?

DervProf

HAMISH_MCTAVISH wrote: »

Nope.

But I do condone people seeking to exploit every legal loophole possible to minimise their tax obligations.

I agree. If it's legal, why not ?

Do you condone people lying about their income to get (larger) mortgage than they would otherwise be able to ?

And slightly different question -

Do you condone people who have undeclared income (to the tax man) going to a broker in order to get a mortgage that they can afford to pay with their untaxed income, but asking the broker to be "creative" with the application (maybe using one of those fake payslips that seem to be quite easy to obtain) ?

HAMISH_MCTAVISH

DervProf wrote: »

I agree. If it's legal, why not ?

Fair enough. Agreed.

Do you condone people lying about their income to get (larger) mortgage than they would otherwise be able to ?

No.

But equally, I don't condone banks excluding some types of income for mortgage calculation purposes.

Do you condone people who have undeclared income (to the tax man) going to a broker in order to get a mortgage that they can afford to pay with their untaxed income, but asking the broker to be "creative" with the application (maybe using one of those fake payslips that seem to be quite easy to obtain) ?

No. I don't support deliberately creating fraudulent paperwork to give to a bank.

But then again, I also don't think it is the job of a bank to be acting as a replacement for the taxman, and I strongly suspect the costs of doing so on a regular basis would exceed the costs due to mortgage fraud.

In which case, it is against all of our best interests for them to do so.

A bank should be concerned with whether the applicant can repay the loan. That's it.

And to be honest, I'm fairly relaxed about whether some of that income comes from legal attempts to minimise taxes such are available to the rich exploiting loopholes, or a bit of cash-in-hand work, such is usually all that is available to the poor to minimise taxes.

The societal solution to onerous levels of taxation is not to increase enforcement.... But rather to reform taxation.

DervProf

HAMISH_MCTAVISH wrote: »

No, you sound like someone whose distaste for high house prices is skewing their perspective.

I might sound like that, but the truth is that I stand to gain financially from HPI.

I am someone who managed to buy a house after a house price boom looked to have ended any chance for me to do so. I managed to buy that house with money that I had paid tax on. The amount borrowed was based on my true income. I am someone who likes to see a fair deal for all. I dislike cheats and crooks. As you know, I find people who are clearly greedy rather distasteful. And for what it's worth, I think that the last few years of stagnation have started to bring house prices back into line. Yes, I think it would be good for the country if house prices were "cheap", but I know that is just a dream. I do believe that if it is inevitable that house prices are going to increase, there are ways which should be implemented to control those increses to prevent serious wider financial problems, and to ensure that cheats and crooks don't get their hands on property that could otherwise go to people who live mostly honest lives.