Summary

The Legal Ombudsman is currently seeing a number of complaints regarding Stamp Duty Land Tax. This is a tax paid when buying a house above a certain value and is collected by HM Revenue and Customs (HMRC).

A lawyer will usually prepare a financial statement on behalf of their client before completion, and collect the stamp duty payment from them. They then pay this money to HMRC. However, we are seeing a number of cases in which the lawyer has failed to make the payment. Unfortunately, as the rules stand, if a lawyer doesn’t make the payment for whatever reason, it is still the client’s responsibility. As a result, HMRC has been contacting home owners requesting the outstanding fees along with interest and penalties.

Reasons for the non-payment vary; from simple mistakes to providing false information or a firm becoming insolvent. The end result is damaging for consumers who subsequently have to try and get their money back. And in the long run it is also damaging for the lawyers involved as they ultimately pay the price.

This short report sets out our concerns and includes six cases that illustrate what can go wrong. We conclude that:

  • Lawyers must improve service standards to stem the growth in the number of conveyancing complaints;
  • In particular, stamp duty payments should be made within HMRC’s 30 day time limit and for the correct amount;
  • Complaints should be treated seriously and dealt with as quickly and effectively as possible; and,
  • Consumer signposting to the correct compensation fund or indemnity insurance provider should be more transparent where a firm has ceased trading.

Finally, we raise the question as to whether lawyers, and not clients, should be held accountable for non-payment of stamp duty by HMRC.