A new mortgage verification scheme to help combat mortgage fraud will be launched on 1 September.

HM Revenue & Customs, the Council of Mortgage Lenders and the Building Societies Association have worked together on the scheme, which was announced in the March 2010 budget.

It has been trialed and refined, and its use will be limited to cases where, following their own checks, lenders reasonably suspect that mortgage fraud may be taking place.

HMRC has set up a specialised unit to deal with requests. For a £14 fee mortgage lenders can send relevant details of mortgage applications where they have inadequate evidence of declared income and suspect fraud, using a secure electronic platform to HMRC.

The Revenue will check income details declared to lenders against information provided in income tax and employment returns, and advise lenders whether or not the details correspond, to help them assess the risk and inform their lending decisions.

CML director general Paul Smee said: ‘Lenders have found during the pilot that the scheme has been very useful in helping them to lend responsibly.

‘It has helped them to avoid lending in some cases where there is a risk of fraud, at the same time as giving them confidence about the borrower's credentials in some cases that they might otherwise have felt compelled to refuse.’

BSA director general Adrian Coles said the scheme is an excellent example of HMRC working proactively with business to provide a valuable service that could significantly decrease mortgage fraud and give an additional check to bolster responsible lending.

He said: ‘Mortgage fraud is a cost to the industry and ultimately the consumer, so this scheme benefits both lenders and consumers alike.’

Colin Barclay, assistant director at HMRC’s risk and intelligence service, added: ‘The mortgage verification scheme is an unprecedented opportunity for HMRC and lenders to work together to combat fraud in the mortgage industry.’