I refer to Robert Forman’s piece about the political stance taken by the Solicitors Regulation Authority over Stamp Duty Land Tax schemes.

SRA investigation reports cite chunks of HM Revenue & Customs guidance, despite case law suggesting that this might not even be capable of being relied on. The reality is that HMRC is a potential opponent to litigation. It has remedies in the Tax Tribunal. The reversal of legislative loopholes is for parliament, as Forman says. It is clear that the SRA does not like the profession using the schemes and, as Forman says, considers them ‘immoral’. Many might agree. However, the SRA’s activity leads to uncomfortable questions. Should it prefer HMRC’s need to secure revenue for the public purse? Should it interfere with independent solicitors who support taxpaying members of the public in their desire to mitigate tax? Alternatively, should it leave this in the hands of the legislature?

The SRA cannot pursue firms on morality alone, so the reports raise a number of conduct allegations, which many might regard as spurious. The reports suggest that the way firms completed relevant documentation was incorrect, despite the fact that these are legal tax points for HMRC to challenge in the tribunal, if it so wishes.

Another allegation is a failure to explain the risk to clients, despite clients generally being high-net-worth business people, not Jo Public, with access to financial advisers and accountants and, indeed, to the schemes’ promoters. Evidence might suggest that clients simply wanted the chance to defeat the exchequer - and the vast majority succeeded.

Another allegation is a failure to report to lenders. The SRA’s suggestion that an obligation arose under the Council of Mortgage Lenders Handbook at the material time is highly questionable. The separate allegation that this ‘therefore’ leads to a conflict of interest between borrower and lender is significantly more debatable. A detailed analysis demonstrates no conflict. Indeed, the SRA is well aware of numerous examples where lenders knew of the use of schemes, but did not, at the time, bat an eyelid.

Firms are defending these and other allegations. The SRA had every opportunity to take a case to the Solicitors Disciplinary Tribunal where the relevant arguments would be fully debated. They did not do so. In the Dlay case, for reasons only known to the accused and her adviser, all allegations were admitted. The investigation process, of course, utilises all the rigours of SRA digitally recorded interview techniques. Issues such as lenders’ true reaction to the schemes at the time do not appear to have been drawn to the SDT’s attention, nor that other firms have received letters of advice with no further action from the SRA.

It is, of course, on the Dlay ‘admitted’ case that the SRA’s warning card about tax ‘evasion’ (of which there is no evidence) is based.

Vanessa Shenton, director, The Compliance Partner Ltd, Abingdon, Oxfordshire