The tax man has deputised mortgage brokers to tip them off if they suspect customers are failing report their rental profits.

New lending rules demand that mortgage arrangers quiz their buy to let clients about discrepancies between accounts and tax filings – and even make secret reports if they suspect money laundering or tax evasion.

The mortgage adviser faces a fine if they tell the customer about the tip-off.

Mortgage advisers are looking at accounts for an entire portfolio rather than figures for single properties under new mortgage rules.

David Whittaker, chief executive of broker Mortgages for Business, said: “We’ve seen a number of clients where the story they’ve told us over the income and tax doesn’t match the numbers and had to file a couple of suspicious activity reports where they declined to make use of the HMRC’s Let Property campaign since the new PRA rules came in.

“Initially clients are grumpy for being pulled up, but most conversations end with the borrower regularising their tax affairs and the loan going ahead.

“The whole market is now showing more curiosity about borrowers’ tax and income, with brokers and lenders sharing responsibility for spotting irregularities – if the broker doesn’t spot something that the lender does, it’s not necessarily criminal.

“But if the adviser does see something that looks suspicious but fails to act it could come back to bite them.”

HM Revenue & Customs argues collecting tax information from brokers is just another way of triggering the right tax response from landlords.

“We know most landlords pay their fair share, and we offer information and guidance to help landlords get their tax right and avoid errors,” said a spokesman.

“HMRC also has a robust strategy for tackling evasion and avoidance in the rental sector, collecting and analysing data gathered from a wide range of sources to understand and manage this risk to the tax system, and identify where there may be undeclared income.”