A solicitor has been removed from practice for dishonestly understating purchase prices on two properties in order to avoid paying stamp duty (SDLT).
Both purchases were declared as being below the threshold for SDLT when in fact, together they should have accrued tax of over £50,000.
The Solicitors Disciplinary Tribunal heard that Richard Chan, 46, had bought a house in Hampsthwaite in 2009 for £525,000. He told HMRC he paid £165,000 for it. Then in 2010 he (and his wife) bought an office in Harrogate for £763,750 and told HMRC that he paid £100,000.
The office was for Abode Solicitors Limited, of which Chan was Senior Director. Abode acted for Chan on both purchases.
When HMRC had queried the figures supplied, Chan gave various explanations, one of which was that his agent (Abode) had made a mistake. In both cases, HMRC imposed penalties which Chan appealed and lost. He also sought to avoid details of the cases being published.
The first allegation by the Solicitors Regulation Authority (SRA) against Chan was that he had declared the property prices below the price he had paid for them and had done so dishonestly.
The Tribunal found that this was the case and that he had breached Principle 2 and 6 of the SRA Code of Conduct. They also said that he had not made it clear to HMRC that the agent he was referring to, when he used the excuse that his agent had made a mistake, it was in fact the firm of property solicitors of which he was a Senior Partner.
The Tribunal felt that Chan was an experienced solicitor and “was satisfied that he knew exactly what he was doing” and that he “had deliberately misled HMRC with the intention of avoiding SDLT”.
The SRA also alleged that Chan did not notify them of the penalties from HMRC and this was proven. In fact, he took steps to avoid discovery when he had a clear legal and regulatory obligation to report it.
However, the Tribunal did not find against him on a further allegation which was that his firm continued to promote SDLT avoidance schemes.
When considering sanctions, the Tribunal concluded that the misconduct was for “personal financial gain” and that it was “deliberate, calculated and repeated and continued over a period of time”. Also, that Chan had “sought to mislead the SRA”.
Although the stamp duty and penalties had been paid, the Tribunal calculated that the avoidance had cost the tax payer in excess of £50,000 and that Chan had only paid the penalties under protest.
The Tribunal considered the misconduct so serious that there was no alternative but to remove Chan from practice. He was ordered to pay costs in excess of £33,000.
Chan did not attend the hearings or provide any mitigation.
