Friday, 13 August 2010

SDLT Schemes To Be Avoided?

This week's edition of my local free newspaper contained an advertisement for a service claiming to "save thousands of pounds on Stamp Duty" and "...halve your Stamp Duty" targeted at those buying a property priced in excess of £250,000.

Stamp Duty Land Tax ("SDLT") is charged at the rate of 3% on such properties up to a value of £500,000 and 4% beyond that, so the potential savings are significant.

Having investigated the website in question, the savings take the form of a "rebate" received within 30 days of completion. The scheme applies to residential and commercial property, whether freehold or leasehold, and individuals, companies and pension funds. it is "...structured around the in depth advice of leading Tax Counsel" and reference is also made to a conveyancing panel. There is even a money back guarantee. Sound too good to be true? Well apparently " isn't 'that easy'" to develop these plans.

Unsurprisingly, no details are given as to how the savings are actually achieved, although the examples suggest that no SDLT is payable at all. Rather, the Client pays the advisers' fees.

As I am not a tax expert, I cannot begin to guess how the schemes are structured or comment on their effectiveness. However, if the number of firms listed on Google following a search for "SDLT avoidance" is anything to go by, there must be something in it. This leads me on to my main question: should Lawyers be alerting Clients to the existence of such schemes and, if they should, is a failure to do so a breach of duty, giving rise to a claim in negligence?

Law firms will naturally be very wary of participating in any scheme which they do not understand and/or raises suspicions. Perhaps, that is why the company I looked at had their own conveyancing panel, prepared to facilitate the arrangement. In any event, where does this leave the High Street practise unfamiliar with the process? Do they take a punt and become involved, say nothing and risk a negligence action or mention the possible savings to Clients and hope that they are not "poached" by a panel firm? Of course, these scenarios assume that the Client has not already been "hijacked" like Estate Agents.

I would welcome comments from anyone with experience of these schemes or any further information.

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