The Legal Ombudsman has released a report about Stamp Duty that raises the question of whether HMRC should hold lawyers, not clients, accountable for non-payment of stamp duty.
The report, Complaints in Focus: Stamp Duty, found that there is an alarming trend of lawyers failing to pay Stamp Duty Land Tax on behalf of their clients.
The Ombudsman commissioned the report after receiving an increased number of complaints from distressed home-owners who were receiving demands from HMRC for thousands of pounds of unpaid fees plus interest and penalties, after thinking their stamp duty was paid.
After scrutinising the cases with the highest financial remedies, the public body found that most of these were down to lawyers not making the necessary payments.
Payment of stamp duty, a tax paid when purchasing a new property above a certain value, is usually collected by the home-buyer’s lawyer as part of the financial statement they prepare, which is then paid to HMRC.
The current rules around stamp duty lay the responsibility for payment at the feet of the person purchasing the property, so even if a a home-owner has paid the tax to the lawyer who has then failed to pay it to HMRC, it is still seen as the fault of the person who purchased the property.
The Council for Licensed Conveyancers (CLC) said they have been working on this issue with HMRC and their regulatory partners, in a bid for system-wide changes that will help ensure SDLT is paid at the time of completion and in line with regulations.
The Council also stressed that of the hundreds of thousands of transactions made each year, only a very small number are affected by the issue of lawyers not paying their clients’ stamp duty.
The CLC also warned that it has rigorous standards and monitoring in place to ensure non-payment of SDLT is monitired and uncovered and lawyers who are failing to pay SDLT on time will be found out.
The Legal Ombudsman’s report concluded that lawyers must improve their service standards, and that, in particular, stamp duty payments need to be made within the HMRC’s 30 day time limit.
