Should conveyancers advise on SDLT?
The surcharge rate of stamp duty land tax for purchases of additional residential properties has been much in the news recently. The unfortunate events which have triggered this publicity have shown that:
• The rules are highly complex;
• They are not fully understood by most purchasers (and many conveyancing advisers);
• Most purchasers expect their conveyancing advisers to be able to advise them fully on SDLT;
• Many conveyancing advisers are not comfortable doing so but are also reluctant to explain to their clients that they do need to get specialist advice.
Some complexities of the surcharge rate
The surcharge rate (5% of the purchase price) can increase the SDLT bill on a purchase by a substantial amount (often much more than the standard SDLT which would otherwise be payable). Whether it applies is determined by factors relating to the property type but also the purchaser’s circumstances and also sometimes those of their relatives.
There are detailed deeming rules, designed to prevent avoidance strategies, but which often catch innocent arrangements by accident; these situations affected include:
• A spouse buying on their own, who is subject to the surcharge rate if it would apply if their spouse was buying jointly with them; and
• A parent whose child (under the age of 18) is a beneficiary under a trust owning a residential property who can be treated for the purposes of the surcharge as having an interest in that property, even though the parent in fact holds no such interest.
By contrast, there are some situations in which a purchaser who owns a property is deemed for the purposes of the surcharge rules not to own it. These include:
• A divorced spouse who owns a property which is the subject of a divorce court order requiring them to retain ownership of the property to be the main residence of their ex-spouse for a period; and
• The joint inheritor of a property who holds no more than a 50% interest in a property inherited jointly with others during the three years prior to the date of purchase of the new property.
Should it be up to a conveyancing specialist to ask questions designed to elicit this type of information from their client? If they do obtain this type of information, should they give detailed advice to their client on matters on which they are not trained? Of course not.
How Rosetta Tax can help
At Rosetta Tax, we can help conveyancers and their clients avoid problems in this area.
• We provide an initial high-level appraisal of the position before a client is committed to paying a fee. So if we think the situation is bad news, we will tell the client that for no charge (unless the client then wants further details).
• We only charge for advice where our advice will deliver a benefit for the client.
• Wherever possible, we provide a fixed fee quote in advance, and we stick to it.
• We provide a detailed analysis including a clear description of all relevant facts so that our advice, including the basis for it, is clear.
Our clients appreciate our commercial, clear advice. Example feedback includes:
“Thank you for your clear and helpful response on the SDLT position of the property. Your reference to HMRC’s guidance gave me a realistic view of the likely outcome and helped me understand the matter.
While it's bad news, this is an excellent example of customer service. Compared with other replies I have had, yours stands out for its clarity, professionalism and for dealing directly with the point. It is much appreciated.”
If you or your clients need advice on SDLT, please do get in touch.
About the author
Charles Goddard is a tax solicitor with over 20 years' experience of advising on the corporate tax aspects of a wide range of corporate and financial transactions. His clients range from multinational blue-chip institutions to private individuals.
Find out more about Charles and our corporate tax advice and consultancy services for business.
Share this article: