Getting a mortgage and disguised earnings?

vixmony

ACG said:

OK...
Best case scenario - A relaxed lender may just use the income which can be verified. If that is enough this might slip through. 
Worst case scenario - It gets picked up and he gets reported. I am not sure puling the application will alter anything. A lot of lenders have systems to weed out fraud, so you could find it has already been flagged. 

Difficult to say what will happen for sure. I think a lot depends on the lender and the LTV. 

The broker needs sacking though. They should have picked up on this before the application went in, not that they can be blamed in anyway for what the relative is doing, at worst they are complicit. 

Many thanks for your input. To be honest, I'm still surprised that people, are even able to do this kind of thing, knowing full well, that hmrc have got system's, to go back years, over tax evasion, which is for another day. My understanding is that the broker, may be aware and he is using lenders who turn a blind eye to this kind of thing. I immediately told him that I doubt, this is possible, as the broker, has no control over what the lender can do with the application. I still think he should withdraw the application, as this is still with broker, but when he sends over the bank statement, then the broker can proceed to approach the lender. Is it possible that lenders could also break the law as long as there is enough money to satisfy the mortgage application? 

ACG

It is possible to get this through, there is no guarantee he would not end up on a fraud list though. 
In the nicest possible way, I would not go near it with a barge pole. But I would say there is a more than 50% chance I could it through. The risk to the broker is crazy though, it is basically their livelihood at stake. 

Lenders would only be breaking the law if they knew what was going on. Some lenders are unlikely to question it, others would probably look past it if the broker lies. 

vixmony

ACG said:

It is possible to get this through, there is no guarantee he would not end up on a fraud list though. 
In the nicest possible way, I would not go near it with a barge pole. But I would say there is a more than 50% chance I could it through. The risk to the broker is crazy though, it is basically their livelihood at stake. 

Lenders would only be breaking the law if they knew what was going on. Some lenders are unlikely to question it, others would probably look past it if the broker lies. 

Oh so if the broker puts through an application which is illegal, like this one, he's also in the wrong? Also as you've mentioned that the lender might not know, if the broker does not tell them, is it therefore the broker who checks things over, as opposed to the lender. I would have thought the lender has more responsibility, as its their money? 

ACG

Both of them check.
It is the brokers job to filter out cases that do not fit criteria and dodgy customers. 
Some lenders check less than others and rely a little more on brokers and automated checks. 

Grumpy_chap

vixmony said:

Hi, I thought I would drop by and ask some advise, on behalf of a relative. They're going to buy a house soon and It turns out he's a private contractor, and he has some disguised earnings, paid via a loan scheme. Now they have applied for a mortgage, given a decision in principle however, he's submitted a payslip with less wages, than he's actually paid as the rest of the payments, are disguised as some kind of a loan payment into the same bank account. The issue is that the mortgage broker has now asked for them to provide bank statements and they will be able to see that he gets more money, coming in than he told the mortgage company. Will this be an issue with the mortgage company? that he gets more than he told them? Would they want to know the source of the other income?To be honest, from my end, I told him I would be more worried about him being locked up, by the tax man. 

Normally a private contractor (I assume operating via Ltd Co.) would have mortgage assessed against SA103 - I am not sure how operating via the loan scheme impacts what the SA103 shows.

Rather than fretting about the mortgage, I'd be more worried about whether they will be subject to the loan charge at some point.  

Best thing the OP can do is simply not be involved and let the relative sort their own affairs.

vixmony

Grumpy_chap said:

vixmony said:

Hi, I thought I would drop by and ask some advise, on behalf of a relative. They're going to buy a house soon and It turns out he's a private contractor, and he has some disguised earnings, paid via a loan scheme. Now they have applied for a mortgage, given a decision in principle however, he's submitted a payslip with less wages, than he's actually paid as the rest of the payments, are disguised as some kind of a loan payment into the same bank account. The issue is that the mortgage broker has now asked for them to provide bank statements and they will be able to see that he gets more money, coming in than he told the mortgage company. Will this be an issue with the mortgage company? that he gets more than he told them? Would they want to know the source of the other income?To be honest, from my end, I told him I would be more worried about him being locked up, by the tax man. 

Normally a private contractor (I assume operating via Ltd Co.) would have mortgage assessed against SA103 - I am not sure how operating via the loan scheme impacts what the SA103 shows.

Rather than fretting about the mortgage, I'd be more worried about whether they will be subject to the loan charge at some point.  

Best thing the OP can do is simply not be involved and let the relative sort their own affairs.

Grumpy_chap said:

vixmony said:

Hi, I thought I would drop by and ask some advise, on behalf of a relative. They're going to buy a house soon and It turns out he's a private contractor, and he has some disguised earnings, paid via a loan scheme. Now they have applied for a mortgage, given a decision in principle however, he's submitted a payslip with less wages, than he's actually paid as the rest of the payments, are disguised as some kind of a loan payment into the same bank account. The issue is that the mortgage broker has now asked for them to provide bank statements and they will be able to see that he gets more money, coming in than he told the mortgage company. Will this be an issue with the mortgage company? that he gets more than he told them? Would they want to know the source of the other income?To be honest, from my end, I told him I would be more worried about him being locked up, by the tax man. 

Normally a private contractor (I assume operating via Ltd Co.) would have mortgage assessed against SA103 - I am not sure how operating via the loan scheme impacts what the SA103 shows.

Rather than fretting about the mortgage, I'd be more worried about whether they will be subject to the loan charge at some point.  

Best thing the OP can do is simply not be involved and let the relative sort their own affairs.

Hi many thanks for your input. Was just trying to share ideas, to try and help him out of this. He's definitely, getting a permanent job now, and out with this loan scheme, as hmrc, definitely know all about our tax affairs. They will definitely come knocking on the could be days, weeks, years, but I know they come. Just don't want him, to be in a bigger mess than he's already, as he still thinks that the broker, knows what he's doing, as they have already got him a dip! 

user1977

ACG said:

is it legal (in the same way as what Lewis Hamilton does is legal and classed as tax avoidance) or is it illegal (in the same way as what Jimmy Carr did and classed as tax evasion)?  

I'm pretty sure Jimmy Carr's tax scheme was also merely avoidance, albeit he apologised and "undid" it.

ACG

user1977 said:

ACG said:

is it legal (in the same way as what Lewis Hamilton does is legal and classed as tax avoidance) or is it illegal (in the same way as what Jimmy Carr did and classed as tax evasion)?  

I'm pretty sure Jimmy Carr's tax scheme was also merely avoidance, albeit he apologised and "undid" it.

He seemed to get shouted at where as Sir Lewis didnt.

Keep_pedalling

I am surprised anyone is still receiving income under one of these outright tax avoidance schemes. Anyone receiving money this way should have voluntary settled the unpaid with HMRC last year, your friend faces paying years of back tax plus a hefty penalty charge when they catch up with him, and he has obviously been lying on his recent tax returns which ask if you have received income though one of these schemes.

user1977

ACG said:

user1977 said:

ACG said:

is it legal (in the same way as what Lewis Hamilton does is legal and classed as tax avoidance) or is it illegal (in the same way as what Jimmy Carr did and classed as tax evasion)?  

I'm pretty sure Jimmy Carr's tax scheme was also merely avoidance, albeit he apologised and "undid" it.

He seemed to get shouted at where as Sir Lewis didnt.

I guess people don't expect much better from Monaco-dwelling racing drivers.

It was the K2 tax scheme which Jimmy Carr had signed up to, which was (at the time) legal.