Law firms and mortgage advisers are increasingly referring clients to ‘specialist advisers’ for advice on their Stamp Duty, but this isn’t without its own problems…
“…solicitors deal with SDLT day in, day out, so they should mug up on the subject and deal with it themselves, not abdicate their responsibilities to their client by fobbing it off to accountants who never deal with it.”
“I am now an SDLT expert – well at least I know more than the firm who is supposedly advising me!”
“…solicitors are not up to SDLT…”
Just a few quotes from replies to a post on an accounting website titled ‘Should Conveyancing solicitors advise on SDLT? Or fob it off ‘to your tax advisor’
Leaving aside the breathtakingly uninformed opinions as to the limits of solicitors’ ability to advise on tax matters, these all highlight a deeper issue – firms are generally reluctant to provide anything which could be deemed ‘advice’ when it comes to Stamp Duty. It’s not difficult to see why – back in the 2010s, the SRA and HMRC took a particularly hard line on any firms they saw as being involved in any form of ‘avoidance’ of SDLT. Added to this, the simple fact of not providing advice which lies outside your direct expertise means that when it comes to Stamp Duty – a personal tax liable to the purchaser and subject to more exceptions, exemptions and amendments than almost any other tax on the UK statute books – it’s best to play it safe.
The issue is that when law firms (and even mortgage brokers and IFAs) advise clients to seek specialist advice on the tax, they assume either that it’s the solicitor ‘fobbing them off’ or – just as bad – that what’s meant is they should speak to their accountant.
However, Stamp Duty is wildly different from the taxes dealt with in everyday life by the average accountant. The rules around non-resident surcharges and First Time Buyer relief are just two examples where the application to Stamp Duty is very different to how those things are defined elsewhere. Stamp Duty is a distinct specialism all of its own, and firms who advise on it tend to be therefore highly specialised.
The problem is that accountants not only don’t know themselves how to deal with Stamp Duty, but they assume that it’s actually something solicitors should be dealing with themselves. If you said to an accountant they should advise their client on the electrical safety of their premises because they know how to change a plug, they’d likely look at you as if you were mad. Yet they assume that a conveyancer must also be an accomplished expert on the subject of Stamp Duty just because the tax relates to the property buying process.
But how to solve this issue? Sharper language in your client communications? ‘Seek the advice of a specialist Stamp Duty Tax Adviser?’, ‘Don’t use your accountant?’ These seem as likely to cause more misunderstandings, as clients flail desperately to find one of the (fairly rare) SDLT expert tax firms or their accountants get their back up after their client has been told not to speak to them.
HMRC’s own calculator is limited, useful in a basic sense for rough estimates on the most straightforward cases. Get anything more complex than a married couple selling their residence and buying another and it can’t realistically be relied upon.
Call it self-interest, but it seems to us that an internal, built in part of your own firm’s process is the best solution. A dedicated, state of the art piece of software constantly updated to reflect the latest changes, backed by expert advice and providing you with all the paperwork you could need to document the whole process while taking responsibility for the final figure entirely off your shoulders.
If we do say so ourselves, the best solution to this accounting error has to be Compass.
This article was published by Compass as part of their advertising agreement with Today’s Conveyancer.
The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.
One Response
Suggesting a client seeks specialist advice is good practice and something I’m sure the Professional Indemnity Insurers and the Regulator would endorse.
If clients read the client care letter they’d probably find there listed that which they firm specialises in and that which it doesn’t. Just as an orthodontist would make a pretty poor neurologist those who like to whinge about advice they are given need to grow up and accept that getting expert advice from a specialist rather than expecting a non specialist to muddle through is a jolly good idea.