A third law firm has been fined by the Solicitors Regulation Authority (SRA) for its involvement in a stamp duty avoidance scheme operated by Inventive Tax Strategies.
FWD Law, based in Newport, Wales, was fined £2,000 for acting in over 100 conveyancing transactions where clients avoided paying a total of over £1.9m in tax.
Inventive Tax Strategies, which went into administration in October 2013, was one of two companies promoting the schemes used by FWD Law.
Earlier this month, it emerged from another regulatory settlement agreement that Maddersons, a small firm based in Hertfordshire, had been fined £2,000 for running schemes with Inventive.
Surrey firm Mundays was also fined £2,000 by the SRA in October last year for offering tax avoidance schemes through Inventive and two other companies.
According to the regulatory settlement agreement with FWD Law, published on the SRA’s website this week, the firm breached the code of conduct by failing to disclose information to lender clients, acting in transactions where there was a conflict of interest between two or more clients, and failing to keep proper accounting records.
The SRA said Her Majesty’s Revenue and Customs (HMRC) issued technical notes in 2007 and 2010 which demonstrated that it did not consider the avoidance schemes to be legitimate.
A report by the SRA’s forensic investigation department in 2012 examined 103 conveyancing transactions carried out by the firm from 2008 to 2011.
In mitigation, the report said that Charles Williams, principal of FWD Law, had “ceased his involvement in stamp duty land tax (SDLT) schemes” before the 2012 inspection. “He states that he has also retired from private practice following a period of ill health.”
In further mitigation, Mr Williams argued that “it did not seem to him that mortgage terms or Council of Mortgage Lenders requirements necessitated disclosure”.
He stated that, in particular, “there was no misrepresentation of the purchase price, all scheme steps took place simultaneously and lenders obtained a fully enforceable first charge registered against the title”.
Mr Williams added that he accepted that “errors were made in respect of communication to lenders” but said the transactions were carried out in good faith, “not believing that he was doing anything improper”.
A statement on FWD Law Limited’s website said the firm ceased trading on 29 December 2013.