Purchasers of residential and commercial property can be left out of pocket by as much as £80,000 if Stamp Duty Land Tax liability is miscalculated or wrongly classified, but property search specialist, Kate Bould, says residential and commercial property lawyers and conveyancing specialists can get it right if they use the right support and tools.
“There is the potential for home buyers to overpay tens of thousands of pounds to HMRC – sometimes as much as £80,000 if a client is buying property or premises valued over £1million – simply as a result of an incorrect SDLT calculation being submitted to HMRC,” explains Kate, managing director of Index West Midlands, which provides conveyancing searches, reports and property transaction solutions for commercial and residential property lawyers.
“Not only does this leave solicitors’ clients substantially out of pocket, but it could also lead to court action for them as legal advisers.”
Last year, in what it described as a bid to ‘improve the efficiency of the SDLT system’, the government announced new measures to reduce the time limit property purchasers have to file a SDLT return and pay the tax due – from 30 days to 14 days, applicable on all property transactions on or after 1 March 2019.
Following the change taking effect, Kate identified a growing problem for property and conveyancing solicitors, alongside a worrying rise in the number of so-called ‘SDLT claims specialists’ profiteering from miscalculations:
“Information about every commercial and residential property transaction is published and available on the Land Registry website,”
she explains.
“This information is being used by a new breed of companies as a source of potential work, as they use it to identify overpaid SDLT about which they then contact the purchaser about, to tell them of the miscalculation and the offer of help to claim a refund – for a substantial fee.
“As well as this, solicitors are exposing themselves to risks if a property is mis-classified and the SDLT payable to HMRC miscalculated.”
Kate says improving solicitor’s understanding of the impact of SDLT calculations holds the key to solving these problems:
“The message is slowly getting through, but there is still work to be done to ensure every single home buyer gets the opportunity to have their SDLT independently calculated and checked,”
she says.
“Since spotting the trend five or six years ago, I have committed to tackle improving solicitors’ knowledge of SDLT through education and best practice programmes, and by encouraging solicitors to speak with every one of their property-buying clients about SDLT and the financial importance of getting calculations right and checked.”
As part of its pledge, Index West Midlands has this month joined forces with Solihull-based Cap Ex Associates.
Kate explains:
“By working with Cap Ex Associates, our solicitor clients have access to specialised, independent, tailored, and compliant Stamp Duty Land Tax advice and support that in turn, gives them assurance that SDLT calculations are accurate.
“We selected Cap Ex Associates after a rigorous tender process,”
she adds,
“and by joining forces, we can together ensure the provision of tailored SDLT audit and calculation support and advice is available to all solicitors.”
Index West Midlands provides conveyancing searches, including reports and property transaction solutions such as environmental risk factors, HS2, utility and telecommunications reports, for commercial and residential property lawyers, real estate and agriculture lawyers, across Warwickshire, Worcestershire, Herefordshire, Shropshire, Staffordshire and the Black Country.
For more information: https://indexpi.co.uk/offices/westmidlands.html.
Cap Ex specialises in tax advice, particularly SDLT and Capital Allowances, and has a 100 percent success rate for SDLT refund claims recalculations with average savings of between £30,000 and £100,000.
