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HMRC warns of self-assessment delays which brokers fear could stall mortgage process

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  • 14/05/2021
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HMRC warns of self-assessment delays which brokers fear could stall mortgage process
Self-employed mortgage borrowers have one more “hoop to jump through” as they face delays of more than five weeks to receive their 20/21 tax year overview from HMRC.

 

Borrowers who took out the government’s Self-Employment Income Support Scheme (SEISS) grants are being told by HMRC that they cannot receive their current tax year overview within the normal turnaround of between 24 and 72 hours.

The delay will affect those borrowers who want to use their 2020/21 accounts to support their mortgage application. The tax year overview is requested by most lenders as an accompaniment to other supporting income evidence.

Brokers have reported that their clients and accountants have been told the delays are due to eligibility checks by HMRC.

HMRC, however, says the delays are occurring when taxpayers have included an incorrect return for the SEISS grant.

Matt Poole, director of Poole Family Financial, said his client is a tradesman and took out the grant during the first lockdown when he was not allowed to enter people’s homes.

When restrictions lifted, the tiler saw a surge in demand for his services which has continued throughout the tax year.

Following the strong trading year, Poole’s client decided to move to a bigger house and began the purchase process. However, after being told he will have to wait until 19 June before he receives his tax year overview he is concerned his purchase may fall through.

Stuart Gregory, managing director of Lentune Mortgage Consultancy, yesterday tweeted a response he had received from his accountant.

It read: “I have had a long call with HMRC agent services this morning re 20/21 tax year overview (TYO) confirmation of filed 2021 SA return calculations.

“Currently no TYO are being updated for customers who received SEISS grants until their eligibility has been fully checked.”

The tweet continued: “In conclusion, if lenders insist on a 2021 TYO they are not going to get one for a couple of months.”

Jane King, mortgage and equity release adviser, Ash-Ridge Private Finance, said she received similar information from an accountant.

Poole said: “For the self employed it’s the latest hoop to jump through in getting a mortgage.

“Many self employed people were impacted by Covid last year and didn’t have a choice but to take the SEISS grant.

“For a lot of people business bounced back and they actually did really well last year. For these people who are now looking to use their 20/21 income towards affordability for mortgages, we are seeing delays in obtaining the paperwork that mortgage lenders require.

“Hopefully we won’t be waiting long for HMRC to review these particular tax returns and issuing the all important tax year overview that mortgage lenders require.”

Gregory said: “At the current time, borrowers need reassurance and some certainty. It’s important for them to know if they can expect delays if they want to use their 20/21 tax return information with lenders in the coming months.”

A spokesperson for HRMC said: “SEISS grants are subject to Income Tax and National Insurance. Customers who have received these grants must include them in the relevant Self Assessment return in the correct section. Errors when completing the return will result in a delay to HMRC processing the return due to having to make manual corrections.

“Where applicable, we are working to expedite the process for our vulnerable customers. Where we take corrective action, we will tell customers the result by issuing a tax calculation explaining what we have corrected and why.

“We are working to implement an automatic solution for those customers that have included an incorrect return for the SEISS grant. HMRC anticipate that all processing will be complete by early July and in the meantime, we are working hard to manually process as many returns as we can, particularly for customers in a vulnerable situation.”

HMRC said guidance on how to correctly complete the self-assessment form can be found on its website.

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