SRA warns solicitors off SDLT evasion schemes
Collins: involvement in SDLT schemes could put solicitors at risk of breaching SRA principles
The Solicitors Regulation Authority (SRA) has issued a formal warning to lawyers to think twice before becoming involved in stamp duty land tax (SDLT) schemes.
With SDLT evasion thought to be worth up to £1bn, the SRA has told firms that it will look “very closely” at the conduct of any firm actively involved in such schemes, which see to exploit perceived loopholes in tax laws to reduce or eliminate SDLT liability.
In one recent Solicitors Disciplinary Tribunal case, a solicitor was fined £15,000, and ordered to pay £30,000 in costs. The SRA says other cases are in the pipeline.
“We are aware that a number of firms are taking corrective action such as ceasing to promote SDLT schemes, informing buyers that independent legal advice may be needed, as well as ensuring lenders are aware of all the details of the SDLT scheme,” it said.
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HM Revenue & Customs is investigating all SDLT schemes – and can do so for up to four years after the transaction – and says very few actually provide the savings their promoters claim.
If HMRC successfully challenges a scheme, buyers could be liable to pay all of the SDLT, plus interest and a penalty. Solicitors who knowingly provided information in support of a tax return that is incorrect could face a penalty from HMRC of £3,000 per submission.
The SRA said it is particularly concerned about schemes involving residential properties.
Executive director Richard
Collins said: “In view of the level of concern on the part of HMRC and the fundamental importance of integrity in the provision of legal advice, we will look very closely at the conduct of any firm actively involved in these schemes. Buyers of property are free to use honest and proper tax planning to mitigate their tax liability, but there are a number of risks and misconceptions surrounding SDLT schemes.
“Given this, we would urge any solicitor involved or considering becoming involved in the implementation or promotion of a scheme to make sure they comply with the code of conduct. This includes acting with integrity, independence, in the best interests of the client, and behaving in a way that maintains the trust the public places in them and the provision of legal services.
“Involvement in SDLT schemes could put a solicitor at risk of failing to uphold any, if not all, of these principles.”
The warning tells solicitors to be wary of claims by promoters of SDLT schemes that it is backed by a “robust counsel’s opinion”, advising them to check it is genuine and has not been tampered with.
The SRA received the backing of David Gauke MP, a former City solicitor who is now the Exchequer Secretary. He said: “I welcome the work that the SRA is undertaking to ensure solicitors are not abusing their positions of trust, and their obligations to all their clients when advising on and conveyancing property.
“HMRC is investigating schemes notified to it and also tracking down other users of schemes to challenge apparent deficiencies in returns submitted. HMRC will seek payment of the full amount of SDLT in all such appropriate cases.”
- Read the warning in full here.
Tags: Solicitors Regulation Authority