SDT: reputational damage to profession severe
A solicitor has been struck off after he bought his home and his firm’s office for £1.3m but dishonestly declared he had paid only £265,000 altogether, in order to avoid paying over £50,000 in stamp duty land tax (SDLT).
In both transactions, Richard Chan – who did not appear at the hearing or engage in any way with the Solicitors Disciplinary Tribunal (SDT) – attempted to dissuade the HMRC from making public the fines it subsequently issued so as not to alert the Solicitors Regulation Authority.
He also did not reveal to HMRC when it queried his SDLT declarations that the ‘agent’ he blamed for errors was in fact the firm of property solicitors of which he was senior partner.
Mr Chan – who was born in 1971 and admitted in 1997 – faced allegations that he had breached professional rules in acting dishonestly and failing to self-report the HMRC penalties.
At the time of the alleged breaches the solicitor was the senior director of Harrogate firm Adobe Solicitors, trading as Arc Property Solicitors. The Solicitors Regulation Authority (SRA) intervened in Adobe in October 2013, reportedly with the loss of 40 jobs.
The first property, a house bought by Mr Chan with his wife in 2009, cost £525,000 but he told HMRC he had paid £165,000. The second was an office bought for £763,000 but he declared he had paid £100,000.
On each occasion, after queries from HMRC, he blamed the errors on a ‘mistake’. He was fined £10,500 and £16,000 respectively.
The tribunal found there was “no logic” to Mr Chan’s declarations other than he sought to avoid paying SDLT.
The “evasive” way he dealt with the HMRC indicated he knew his conduct would be regarded as dishonest. He had taken “active steps” to prevent the SRA from discovering he had been penalised, including making an application to the tax tribunal.
However, the SDT declined to make adverse findings on an allegation that Mr Chan’s firm continued to promote SDLT avoidance schemes even though he had been penalised himself.
It said it was “not in a position” to test the evidence from those directly involved in the schemes.
This was even though Mr Chan was already serving a three-year suspension [1] from an earlier SDT for his involvement in operating SDLT schemes.
Deciding sanctions at the latest hearing, the tribunal noted that although the SDLT had eventually been paid, the avoidance would have cost taxpayers over £50,000 and that the penalties were paid only “under protest and after much argument with HMRC”.
The reputational damage to the profession was “severe”, it concluded; Mr Chan was an experienced practitioner with 15 years of post-qualification experience. The motivation for the misconduct was “personal financial gain”.
Matters were aggravated by his dishonesty, the tribunal recorded, adding: “The misconduct had been deliberate, calculated and repeated and continued over a period of time…
“There was active concealment of wrongdoing and the respondent clearly knew that he was in material breach of his obligations. He had dissembled as to the nature of his relationship with the firm…
“The only appropriate sanction in all the circumstances, having regard to the need to protect the public and the reputation ofthe profession, was a strike off.”
The tribunal also ordered Mr Chan to pay costs of £18,000.