Common Sense Conveyancing Needs Compass

June 7, 2023


There are certain things you’d never think twice about doing for a conveyancing file – Environmental Searches, Anti Money Laundering procedures and ID checks. You do all these as a matter of course because it’s what the law requires and what you need to do to minimise the risks to your firm and your client.

But what do you do with Stamp Duty Land Tax?

Well, SDLT is straightforward, right? Stick the relevant numbers into the HMRC calculator and it spits out the answer. What could be easier? As it turns out, that basic calculator HMRC provides doesn’t account for most of the factors which might influence the precise amount of SDLT liability on a transaction.

There’s HRAD (also known as the 3% Surcharge) Are you aware of all the factors which influence whether this applies to a given transaction? The solicitor who informally advised Advance Mortgage Funding certainly assumed they were. Several months and one complaint to the Financial Ombudsman later, they found out they were wrong as the broker was ordered to pay £30,000 in redress to the clients. Having exchanged contracts, they’d had to find an additional £30,000 to complete their purchase when their own solicitor suddenly advised that the HRAD was indeed due.

How about the position on whether a property qualifies as Mixed-Use or not (and is therefore subject to a different rate of SDLT than a purely residential property)? You might think it’s perfectly straightforward, I think you’d struggle to point to any specific legislation or case law which provides an exhaustive definition of ‘non-residential’ for these purposes.

Surely a call to HMRC could straighten out any issues? Assuming you were able to get a timely response, in my own personal experience, I once witnessed a national newspaper get the wrong answer from an HMRC adviser on a SDLT query. The adviser in question confused Civil Partnerships with Common Law Marriage, an error that leaves me to question how much any advice received from that source could be relied upon.

At the last count, 50 different exceptions, exemptions and reliefs can apply to SDLT on property transactions. More appear with frustrating regularity, and HMRC’s own support system often struggles to keep up.

In 2022, for example, it took a fortnight for HMRC’s own online calculator to be updated with the changes announced in then Chancellor Kwasi Kwarteng’s infamous autumn statement. Our own Compass system was updated to reflect those changes that same day. In an increasingly competitive market, can you really afford to wait two additional weeks for your transactions to be completed?

CQS has been updated several times recently in regard to SDLT, formalising a level of responsibility long assumed for conveyancers when it comes to the tax. It might be your clients who get the letter from HMRC, but they will feel – and the regulator would seem to agree – that any mistakes will be down to your firm.

If you get the SDLT calculation on a transaction wrong, your client is potentially liable to penalties for paying too little or significant financial loss for paying too much.

If you make an SDLT error, your firm can be faced with significant consequences, from complaints to the Ombudsman and SRA to compensation costs and increased PII premiums.

Common Sense is defined by Oxford Languages as ‘good sense and sound judgement in practical

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