Taxman Chases Home Buyers In Unpaid Stamp Duty Scandal

Date Published 24 April 2013

Hundreds of people who bought homes in recent years are being pursued for extra money after their Stamp Duty was apparently based on purchase prices that were mis-stated to the taxman by their conveyancers.

The irregularities relate to a number of solicitors and conveyancing firms, and some cases concern house purchases made over three years ago, says the Financial Times.

HMRC has contacted a number of households that were innocently caught up in the problem. They apparently paid the correct amount at the time of their purchase, and trusted their conveyancer to pass the sum over to HMRC. They have been told to pay the amount missing plus interest.

It appears their conveyancers failed to remit the correct amount of Stamp Duty after entering a lower price for the house in the tax return than was actually paid.

As it is buyers who have legal responsibility for the Stamp Duty Land Tax return, HMRC is seeking the money from them, rather than the solicitor, although purchasers caught up in the problem can seek compensation.

HMRC said in a statement: `We contact people if we find a discrepancy between the tax that we think should have been paid on a house purchase and what has in fact been paid.

`We understand this would come as a shock, because the purchaser would naturally expect the money to be sent to HMRC by their solicitor.`

Some of the cases relate to a law firm Wolstenholmes, in Cheshire, where concern was so acute that the Solicitors Regulation Authority acted on Christmas Eve, and again shortly after Christmas, in 2009, to suspend the licences of five solicitors and shut the firm down.

One client of the firm discovered only in December last year when she was contacted by HMRC that she owed almost £10,000 in Stamp Duty, after the firm had entered the purchase price of her property as £126,000 less than she actually paid.

She is claiming the money back through the legal ombudsman. Compensation amounting to £12.3m has already been paid out by the SRA for claims relating to the firm.

A spokesman for Greater Manchester police told the Financial Times that there are currently no criminal proceedings outstanding against former employees of Wolstenholmes.

However, five of Wolstenholmes’ solicitors face a seven-day substantive hearing by the Solicitors Disciplinary Tribunal, which was due to start yesterday.

The internet was abuzz with the story at the time, as many home movers found their plans stymied. These are just two of the links which make for less than happy reading.