HMRC’s proposed Stamp Duty Land Tax changes may be framed as a process requirement, but the implications for conveyancers go well beyond registration and into risk, responsibility and client perception. There is a clear distinction that needs to be understood at the outset, because the current proposal is not about conveyancers suddenly becoming tax advisers, but about how HMRC defines interaction with its systems.
Following engagement with HMRC and the Ministry of Housing, Communities and Local Government (MHCLG), it has become evident the act of submitting an SDLT return, or even making the SDLT payment, is likely to trigger the requirement for a firm to register as a ‘tax adviser’; indeed you will have to have an HMRC Agent Services Account Number to fill in on the SDLT return.
That definition is rooted in process rather than advice, yet the terminology being applied does not reflect that nuance. For conveyancing firms, this creates an immediate tension between what they are required to do in order to complete a transaction and how that requirement is presented, both internally and to clients.
The process is not the problem
We have been told the registration process itself will be straightforward, with firms able to complete it online in around 20 minutes, followed by individual confirmations from relevant staff which should also be quick to complete. There has also been reassurance that any issues around tax compliance will be addressed through engagement, rather than immediate removal of the Agent Service Account needed to submit SDLT returns.
In practical terms, therefore, this is not being positioned as a significant administrative burden, and nor is it expected to prevent firms from continuing to operate. However, focusing on the ease of registration risks missing the central issue, which is not about how long the process takes, but about what it represents.
The risk sits in the label
The concern for conveyancing firms is that the ‘tax adviser’ label carries a meaning which goes far beyond the act of submitting a return. It suggests a level of expertise, responsibility and advisory capability which most firms are neither structured nor insured to provide. We have highlighted to HMRC that simply renaming to ‘Tax Agent’ or ‘Tax Administrator’ would go some way to solving this.
As we have set out previously, this is a proposal based on interaction with HMRC, not the giving of tax advice, yet that distinction is unlikely to be clear to clients. That creates a risk clients will assume their conveyancer is providing tax advice as part of the transaction, particularly where SDLT becomes more complex. In those situations, the gap between perception and reality has the potential to create both client dissatisfaction and professional exposure.
At our recent All Members’ Meeting, Matt Gannon of SCA Law explored this issue in detail and highlighted how easily SDLT work can move beyond straightforward completion into areas requiring specialist tax knowledge. His examples demonstrated that, even within what might be considered routine transactions, there are scenarios where the correct treatment is not obvious and requires a level of analysis that sits outside standard conveyancing practice.
That raises an important question for firms, which is not simply whether they can complete the SDLT return, but whether they can evidence the competence, training and audit trail required to stand behind that work if it is challenged.
Operational reality for firms
In practice, firms are unlikely to have the option of stepping away from SDLT submission, because it remains a core part of the transaction and is tied to lender requirements and registration at Land Registry.
Even where elements of SDLT work are outsourced, the responsibility for submission remains with the conveyancer, which means the requirement to register is unlikely to be avoided. This creates a position where firms must comply with the registration requirement, while at the same time managing the risks that come with being described in a way that does not accurately reflect their role.
Managing client expectations
One of the most immediate challenges will be how this is communicated to clients, particularly at the outset of the transaction. If a firm is registered as a ‘tax adviser’, there is a strong likelihood clients will interpret that as meaning tax advice is included within the service. Without clear explanation, that assumption may go unchallenged until an issue arises.
Firms will therefore need to be explicit about the scope of their role, the limits of the service being provided, and the circumstances in which independent tax advice should be sought. That may require changes to client care letters, engagement terms and standard communications and should not be hidden in plain sight.
The potential for increased exposure
There is also a question around professional indemnity risk, because the use of the ‘tax adviser’ label could be interpreted more broadly in the event of a complaint or claim. If a client believes they have relied on tax advice, even where none was intended, the existence of that registration could form part of the argument. That is not a theoretical concern, but a practical one which firms will need to consider carefully.
This is particularly relevant in more complex SDLT scenarios, where the financial consequences of an error can be significant and the distinction between process and advice may be more difficult to maintain.
As I write, further guidance is expected to be issued shortly, and it is essential it does more than outline the mechanics of registration. It must provide clear definitions of what constitutes interaction with HMRC, who within a firm needs to be registered, and, crucially, what the status does and does not mean in terms of advice. There also needs to be clear messaging which firms can rely on when explaining this to clients, so the risk of misunderstanding is reduced.
This is not about resisting change or avoiding oversight, because firms recognise the importance of accurate SDLT reporting and appropriate interaction with HMRC. The concern is the current approach introduces a label which creates confusion without improving the underlying process, and in doing so, increases risk for firms that are already operating within a complex regulatory environment.
Beth Rudolf is director of Delivery at The Conveyancing Association
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