A solicitor who misled HM Revenue & Customs to avoid paying stamp duty land tax has been banned from the profession.
Richard Chan, 46, was struck off by the Solicitors Disciplinary Tribunal after telling HMRC he had paid just £165,000 for a £525,000 house in Hampsthwaite, near Harrogate, in September 2009.
Less than a year later, he declared to the taxman he had paid £100,000 for a Harrogate office that was purchased for £763,750. On both occasions the declared price meant he saved around £50,000 in stamp duty land tax payments.
Chan was senior director of Abode Solicitors Limited, which traded as Arc Property Solicitors. He told HMRC he had been advised at the time of the office purchase to insert an arbitrary figure as it was still unclear what the price was. But HMRC imposed a penalty of more than £16,000 in full and final settlement.
Chan paid a further penalty of £10,500 for tax avoidance in relation to the house purchase. He had claimed to benefit from ‘grandfathering rules’ which applied to certain tax avoidance schemes, but later withdrew this explanation. Tax officials said his failure to pay was deliberate in relation to the office and negligent in relation to the house.
The SRA, which intervened in the firm in 2013, said Chan must have known he had to pay stamp duty. The tribunal found dishonesty proven in relation to both purchases.
The tribunal also found Chan had not told the SRA of the position with HMRC and that it had imposed a penalty on him. But it dismissed an allegation his firm had promoted SDLT avoidance schemes.
Chan provided no mitigation and did not appear before the tribunal.
The tribunal judgment, published last week, said Chan’s motivation had been personal financial gain. As a solicitor of 15 years’ experience he had sought to mislead the SRA.
Although the stamp duty had eventually been paid, along with the penalties, the reputational damage of a solicitor making false representation to avoid paying taxes was ‘severe’.
‘The misconduct had been deliberate, calculated and repeated, and continued over a period of time,’ the tribunal added.
Chan was also ordered to pay £15,000 prosecution costs.