The Legal Ombudsman’s most recent report focuses on a ‘potentially alarming trend’ relating to the none payment of stamp duty by conveyancers.
The Legal Ombudsman (LeO) reports that conveyancing complaints are up from 1200 in 2012/13 to 1500 for 2013/14. A reflection of the current housing boom affecting some, if not all, of the country. To put this in perspective however, there are some 2 million residential transactions in a year, putting the complaints level at about 0.07%.
LeO highlights a ‘spike’ in issues relating to none payment of stamp duty giving case studies to show the worst cases he has come across. The reason LeO focuses on this particular issue is due to the considerable and unnecessary stress and distress that resulted. In each of these case the clients had put the conveyancers in funds for the tax payable, for them to deal with this as their agents. However they still remain liable for the tax, and were then faced with dealing with HMRC in this respect and trying to recover their money from their conveyancers.
LeO has produced a consumer factsheet on stamp duty, which can be viewed via the above link.
What is stamp duty?
In 2003 a new tax regime creating ‘Stamp Duty Land Tax’ (SDLT) replaced the old ‘stamp duty’ regime. It is still however commonly called ‘stamp duty’. From a buyers perspective the changes may be pretty academic, as the bottom line is still that their property purchase will be subject to a charge for tax. Essentially properties sold for over £125,000 will be subject to the tax.
How is it paid?
Following the completion of the purchase the conveyancer will submit a return for this tax to HMRC. This is similar to any other tax return. We at Wards usually provide a copy of the proposed form to our clients for them to approve prior to exchange of contracts. There are strict time limits for the return to be submitted and the tax to be paid. Complying with these requirements and time scales form part of the conveyancers professional obligations and should never be something for the buyer client to be concerned about. We at Wards Solicitors submit the return online as soon as possible after completion and pay the tax at the same time.
Once the SDLT return has been submitted we receive a certificate. This is necessary for the application to then be made to register the buyer’s title to the property. This is now in the majority of cases submitted electronically and the process concluded within a few weeks from completion. Cases involving newly built property or where the title was not originally registered however take longer. Dealing with these formalities is again part of the conveyancers professional obligations. Once the registration is completed we at Wards confirm this to our clients and supply a copy of the new title entries.
The Buyers obligation
Prior to completion the buyer will need to ensure their conveyancer is in funds to make the necessary payments to cover their stamp duty and Land Registry fees. We at Wards Solicitors will usually provide a completion statement showing the balance required to complete.
The lessons from the LeO report
The majority of case studies indicate that where the payments were not made for the clients the insolvency of the conveyancing firm was a factor. Where firms have included an incorrect price in the return and then not made the payments this could be error, otherwise professional misconduct. In all cases the clients were caused distress and inconvenience but would have been reimbursed via the firms insurers or indemnity schemes.
The issues however highlight the need to choose your conveyancer carefully, to listen to their advice, and be realistic in terms of expectations and timescales.
At Wards Solicitors our clients return to us regularly and are recommended by our existing clients and their friends and contacts. We do not pay referral fees to estate agents for their recommendations. We provide an accessible service through a network of local offices and the use of email and technology, and have traditional values. We expect to provide an efficient and effective service and have a dedicated Client Care Consultant.
For more information please speak to your usual Wards contact, or contact Susan Ellis on email@example.com.