The Solicitors Regulation Authority has fined a London firm after uncovering dozens of housing deals where lenders were not informed that the buyer had used a tax avoidance scheme.

LZW Law Limited provided the regulator with details of 203 conveyancing transactions between April 2011 and March 2012 where clients had been party to a scheme to avoid paying stamp duty land tax.

Of these, investigators found 179 transactions where the firm also acted for the mortgage provider, but crucially did not tell the lenders that buyers were using an SDLT avoidance scheme.

LZW charged purchaser clients between £250 and £500 for the extra work involved in implementing the schemes.

The SRA said the firm had an obligation to disclose to both the purchaser and lender all information material to the transaction.

An agreement notice published on the SRA website this week revealed that LZW did take counsel’s advice on the issue, which the firm considered supported its view that it need not tell lenders. However the guidance came from the same counsel who had advised on implementing the schemes.

The SRA also found that the firm did not advise the buyers as to the consequences of entering into SDLT schemes, and the effect on any future dealings involving the property.

‘The firm acted where there was a conflict of interests of the lenders and buyers in those transactions involving a mortgage,’ said the SRA.

‘A conflict or significant risk of conflict existed between the lenders and buyers because the firm owed separate duties to act in the best interests of both.’

The schemes themselves involved the buyer setting up a company whose specific purpose was to buy the property. The buyers then wound up the company, which distributed its assets to its shareholders, namely the original buyers.

The firm reported the second transaction as a distribution of assets and therefore not one subject to stamp duty. HM Revenue & Customs has said it does not consider such tax avoidance schemes to be legitimate.

In mitigation, the firm said it stopped operating the schemes in March 2013 and the details were disclosed to HMRC.

It added that clients were sophisticated investors who had taken all specific advice about the risks, and that none had complained about the schemes.

LZW said it has co-operated with the SRA and has a clean disciplinary record.

The regulator opted to fine the firm £2,000 for two breaches of SRA principles and two breaches of the code of conduct. The firm will also pay SRA costs of £6,965.

Meanwhile, the SRA has intervened to close Manchester firm Stirling Law Limited.

In a notice on its website, the SRA said there were ‘reasons to suspect dishonesty’ on the part of a manager or employee.

The action was taken three months after the SRA restricted the firm’s director, Glyn Willmott, from undertaking any form of conveyancing work and told him to take a course on mortgage fraud and money laundering.