SDLT and the unknown unknowns…De-risk your practice
The end of the SDLT holiday was a relief for Julie, a hardworking conveyancer in a market town, relentless pressure from thankless clients, working weekends and evenings for months. Then of course, the SDLT returns and Land Registrations had to be dealt with- it didn’t end with the end of the holiday.
Six months later, there was the letter all conveyancers (or any solicitor for that matter). It started “You acted in on the purchase of 27 Randolph Crescent for our clients Mr. & Mrs. Sinclair. You completed a tax return following completion and failed to…..” The rest of it was predictable, allegations of carelessness, failing to explain matter or advise client appropriately. She remembered the transaction – it was just a straightforward with nothing memorable about it at all, one of dozens of similar transactions in that time. She barely remembered doing the SDLT return, but most of the information went straight from the firm’s Case Management System and submitted it for you – so how could it be wrong? Unfortunately, such systems sometimes just map to the HMRC online ‘calculator’ with no investigation of the things that need to be considered before completing a tax return.
Reading the letter with the allegations of negligence – failing to pay the Higher Rate as it turned out Mrs. Sinclair owned another property that her daughter lived in – inherited from her mother, she was stunned. How was she supposed to know? Unfortunately, the case ended up ruining her life for the next 6 months as it ground through the process of notifying insurers, dark looks in her direction at partner’s meetings, management time, and so on, not to mention worries about PI renewals. This and similar cases are happening all the time, since as the late Donald Rumsfeld pointed out, it’s not the things you know you don’t know, it’s the things you don’t know you don’t know that are a big problem.
Thankfully, there is now SDLT Compass which is the first and only accurate expert system which will ask all those questions you need to ask to self-assess this most complex of taxes. If you run all your matters through it, regardless of how ‘straight-forward’ you think it is, the system will pick up matters like Julie’s case and warn you, enabling you dodge the SDLT bullets each time.
The systemized way to look at any transaction regardless of how straightforward is seems as the start, is to look at each of four aspects. Firstly, ‘The Transaction’ – who is the buyer, what is their background, their relationships with other property owners and other properties anywhere in the world. Secondly, what is ‘The Consideration’ – it’s often NOT the figure on the transfer, and might include aspects that were never subject to the old Stamp Duty. Thirdly, what is The Property – looking at MDR, special statutory defined uses, derelict or development property, and so on. Finally, The Land, realising that the higher ‘wholly residential’ rates only apply to property that is exactly that – any other non-residential use of part of the property uses might mean less tax.
Our expert system, Compass, does all this for you, asking all the right questions appropriate to each situation. It either comes up with a Low Risk, indemnified result, allowing you to submit your return with no risk to you or your clients, or flags up the Unknown Unknowns so you can obtain advice to lock down the right payment of the right tax every time. Had Julie used Compass on the Sinclair’s matter her life would have been much easier and extra tax would have been paid at the time, with none of the problems she know has to deal with
See for a demo and free 14 trial of our ground breaking approach to SDLT or contact Hannah Mackinlay at SDLT Compass – [email protected]
This article was submitted to be published by SDLT Compass as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.