News releases

Stamp Duty evasion warning to profession

The Solicitors Regulation Authority (SRA) has urged the legal profession to think twice before becoming involved in Stamp Duty Land Tax schemes (SDLT Schemes).

The schemes look to take advantage of perceived loopholes in tax laws so buyers reduce or negate their charge to paying stamp duty Land Tax. The SRA is concerned about schemes involving residential properties and has warned the profession to make sure any involvement it has with SDLT schemes complies with the Solicitors Code of Conduct.

HMRC has warned it is actively challenging property sale transactions that have been artificially structured to avoid paying the correct stamp duty. It added that very few SDLT Schemes are successful in providing the savings their promoters claim.

If HMRC successfully challenges a scheme, buyers could be liable to pay all of the stamp duty land tax, plus interest and a penalty. Solicitors could also face punishment, as if they knowingly provided information in support of a tax return that is incorrect, HMRC could impose a penalty of £3,000 per submission.

Richard Collins, SRA Executive Director, 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."

David Gauke MP, The Exchequer Secretary, added: "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."

While the SRA's particular current concern is schemes involving residential properties, those considering schemes involving any type of property might also want to look at the issue carefully. Those wanting further advice on the application of the Principles in relation to stamp duty land tax avoidance schemes is available via the SRA's Ethics helpline.

View the warning notice

Print page to PDF