Conveyancers ‘should not cross-examine clients’ over stamp duty

Topics: Property residential,Tax law,Government & politics,Conveyancing

  • Print
  • Share
  • Comments (22)
  • Save

Related images

  • Eddie Goldsmith

Conveyancers risk becoming a police force as part of unintended consequences of the government's higher stamp duty rates, a trade body has warned.

In last year’s autumn statement and spending review, the government announced higher rates of stamp duty land tax on the purchase of additional residential properties as part of a ‘five-point plan’ to refocus support for housing towards low-cost home ownership for first-time buyers.

Advertisement

The higher rates will be three percentage points above current SDLT rates and will come into force from 1 April.

Responding to HM Treasury’s consultation paper on the charge, the Conveyancing Association said it was important that conveyancers ‘are not held responsible for determining when an individual already owns a main residence, and that the individual purchaser themselves be responsible for providing the correct information, which is to be relied upon by all parties’.

The association was ‘keen’ to ensure the purchaser was provided with specific questions to answer in relation to determining whether the extra 3% charge is payable and sign a form declaring the answers to be correct.

The association said it ‘does not want it to be the responsibility of the conveyancer to have to “cross-examine their clients” in this area’.

Chair Eddie Goldsmith (pictured) said the association’s response outlined ‘unintended consequences’ in several areas, ‘as well as stressing the fact that conveyancing firms should not be thought of as the police force in this area’.

‘The information, regarding a purchaser’s liability, has to come from the purchaser themselves and having answered the relevant questions and make a declaration, it is reasonable for the conveyancer involved to rely on that information when filling out a stamp duty form’.

‘Greater clarity’ was needed around parents jointly purchasing a home for their children and ensuring the policy did not impinge on buyers, such as separated couples who have not formally divorced, being able to purchase their own homes.

A decision to exempt companies or individuals already owning 15 properties from stamp duty increases was ‘arbitrary with no scientific basis’.

The association suggested the figure be set at 10, but stressed that ‘the arbitrary nature of such a decision appears to be made without reason’.

The association urged the government to defer implementing the final rules to give conveyancers enough time to comply with any changes.

HM Treasury has said it will confirm its final policy design at the Budget on 16 March.

Readers' comments (22)

  • I'm not sure what he saying here. An SDLT1 is a self-assessment form. A conveyancer is no more a "policeman" re that than an accountant is re a client's income tax return.

    Unsuitable or offensive? Report this comment

  • Anon 4.21
    Not sure you're right.
    Surely mortgagees will insist that the conveyancer tell them what the client says on the SDLT1?
    More liability for the profession!

    Unsuitable or offensive? Report this comment

  • The problem, dear Anon, is that online SDLT forms are (electronically) signed by the solicitor and not by the client..

    But, yes- how will one be able to certify the client's future intentions; and what if these change?

    The new draft clauses were the subject of a rather quiet consultation exercise that closed on 1 February: see https://www.gov.uk/government//consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-on-purchases-of-additional-residential-properties. I did lodge my views there.

    Unsuitable or offensive? Report this comment

  • I think Mick and Jeffrey are wrong per the link below:
    http://www.practicalconveyancing.co.uk/content/view/7695/0/

    Which seems correct per s81B FA 2003.

    Unsuitable or offensive? Report this comment

  • Perhaps the client could be interviewed by 2 conveyancers akin to good cop/bad cop
    Good cop can ask about the sdlt aspect. Bad cop could ask about source of funds re anti money laundering/mortgage fraud

    Unsuitable or offensive? Report this comment

  • As usual, we Solicitors get bogged down in wanting to undermine our colleagues by petty point scoring. The better point being the CA ought to be receiving congratulations for 'coming out shouting' and trying to protect its Members. You know, the sort of thing TLS never seems to do. You can bet your bottom dollar, the lenders via CML will want all of the onus put on Solicitors to vet everything and if they don't, oh yes you have that lovely gold plated PII. The CA should tell the CML to get lost and well done them for their stance !

    Unsuitable or offensive? Report this comment

  • I still don't understand this. What scope is there for a PI claim against a conveyancer if a taxpayer mistakenly understates their SDLT liability in an SDLT1, since no (sensible) conveyancer should accept underwriting their client's SDLT bill (just like with the accountant example above re income tax)?

    Unsuitable or offensive? Report this comment

  • Anon04:49
    Your link to Lovells view in 2003 seems to describe a process related to the paper version of things long since gone by the board. I cannot trace the statutory reference, but s76 of FA 2003 seems to me to be clear. The return is the taxpayer's return not that of the solicitor.
    Where we complete and submit the return as agent then we simply need to do so on the basis of the instructions of our client. Needs must as most clients wouldn't get to first base on the form and we have (more often than not) a duty to a lender. Just keep those instructions in writing on file in the event that a tax-payer against whom further tax interest and penalties are levied (time limit not applying where information is withheld) seeks to come back to us to apportion blame.
    I still send them a print of the form to sign and return for the file even though they will have authorised me to sign it for them at least twice in the course of my normal work flow.
    We probably need to look to our retainer letters in this respect, just as we did when first time buyer relief was about.

    Unsuitable or offensive? Report this comment

  • Michael, I more or less agree, but surely the risk of being sued by the client is in over paying and not under paying SDLT?

    Unsuitable or offensive? Report this comment

  • What is being overlooked here are the risks assumed by solicitor as a "Tax Agent" so that mere participation by filing the SDLT return gives rise to a civil penalty

    Unsuitable or offensive? Report this comment

View results 10per page20per page50per page

Have your say

You must sign in to make a comment

  • Print
  • Share
  • Comments (22)
  • Save

Turkishpolice

European bar groups seek assurances on Turkey

27 July 2016By

European Court of Human Rights urged to strictly monitor Turkey’s obligations under international law.

Scourt

‘Fraud unravels all’: landmark Supreme Court ruling

27 July 2016By

Insurers can break open a settlement agreement in PI cases, highest court rules.

Monique Villa

Pro bono hours dip but in-house contribution rises

27 July 2016By

Just over one in four fee-earners in England and Wales does at least ten hours pro bono – down from one in three last year.