What Is Stamp Duty Advice?

Stamp duty advice is usually advice about stamp duty land tax or “SDLT” or in Scotland, land and buildings transaction tax or “LBTT” or in Wales, land transaction tax or “LTT”. The advice is best given by a solicitor or barrister who understands land law and who is also familiar with the complex rules around these taxes. The key to giving accurate and helpful stamp duty advice is to be able to analyse a complex land transaction correctly and then apply the complicated stamp duty rules to the land transaction accurately.

Who Usually Needs Stamp Duty Advice?

Everyone including companies, partnerships and other entities intending to carry out a land transaction will need stamp duty advice to understand the potential stamp duty liability on that transaction if and when it must be reported to HMRC and whether there are any alternative ways to carry out the transaction to reduce or eliminate the stamp duty and whether there are any reliefs or exemptions available to be claimed.

What Does Stamp Duty Advice Cover?

Stamp duty advice can cover a multitude of things from a straightforward calculation of the tax liability of a simple purchase of a house to complex comparative computations for an acquisition of residential and commercial property with dwellings where a claim for multiple dwellings relief (“MDR”) is made and whether the 3% additional rate will apply and the replacement of a main residence exemption may be in point. Stamp duty advice will also cover the giving of an opinion on whether a building qualifies as an uninhabitable dwelling or whether a property purchase qualifies for mixed-use treatment or MDR.

These opinions are best given by a barrister with recent experience of relevant tax tribunal decisions because they have current knowledge and experience of how HMRC and if necessary, the tax judges will react to a claim for a stamp duty relief or exemption and whether the filing position adopted by the taxpayer in their SDLT return can be regarded as reasonable.

Should I Use Stamp Duty Claims Companies?

Whilst we recommend instructing a specialist as they will be in a more qualified position to advise you correctly, we suggest you express an air of caution and conduct some thorough research into these companies should they approach you. Most of these companies farm claims without giving the facts proper scrutiny and rely on HMRC not having the resources to properly check every claim they submit.

They submit claims to HMRC without proper checks or advice on whether there are solid grounds to make the claim. HMRC are taking a stand against these companies and some are under criminal investigation for submitting fraudulent claims. Unfortunately, HMRC has also put some of their taxpayer clients under criminal investigation as well. You can read further about this here.

Are Barristers More Expensive Than Solicitors?

Normally a barrister will be better value than a solicitor if you instruct the barrister on a direct or public access basis without going through a solicitor. Most solicitors charge on an hourly basis and while that fee may be initially attractive, the eventual time spent on the matter can be more than expected leading to a higher-than-anticipated fee. Public access barristers tend to charge a fixed fee agreed upfront with you and they take the risk that the matter may turn out to be more complicated or time-consuming than originally thought.

Why Is Stamp Duty Advice So Expensive? I Just Need a Yes Or No Answer

This is a frequently asked question and the simple answer is that getting to a yes or no answer will often require considerable work in terms of reviewing the nature of the proposed transaction and any documents, considering the relevant statutory provisions and reading any relevant tax tribunal and court decisions and then applying the lawyer’s expertise and judgment factoring all those things in to arrive at an opinion that will withstand scrutiny if HMRC or another third party decide to challenge the position adopted by the taxpayer.

These are the reasons why the fee quote for a particular matter may seem expensive when all you require is a yes or no but getting to that answer can involve a lot of work on the part of the barrister. You will also wish to rely on that answer if HMRC later question why you treated a transaction for tax in the way you did and so you may need to be able to justify your position by referring to the legal advice you took and naturally, you will want that advice to be correct and based on solid reasoning. Such legal advice requires thorough research and expertise and that is what you are paying for.

Why do you not offer hourly rates? My query wouldn’t take that long to answer

The essence of the fixed fee arrangement is that both Mr Cannon and the client have certainty over the cost of the work. This means that if, as often happens, there is additional and unanticipated work within the scope of your instructions, you would not get charged any further fees and Mr Cannon would absorb this work within the agreed fixed fee. We set fees according to various criteria including the complexity, difficulty, importance, urgency and value of the matter which an hourly rate may not reflect.

Is The Conveyancer Responsible For Stamp Duty Advice?

Legally yes, but they will almost always seek to exclude liability for complex stamp duty advice in their terms of engagement and will ask you to seek stamp duty advice from an expert to cover their back. Such exclusions from the conveyancer’s or solicitor’s liability are of questionable value based on case law and the statutory rules governing consumer contracts for services. However, you are unlikely to want to become embroiled in a liability dispute with your conveyancer or solicitor if the stamp duty position turns out later to have been wrong.

It is therefore normally sensible to seek the advice of a stamp duty expert when matters are complicated even if this involves paying a separate fee so that you can be confident that the stamp duty liability on your land transaction has been correctly advised and you have paid the correct amount of duty and only claimed for a relief or exemption that was properly due.

Patrick Cannon is often asked to supply stamp duty advice on complex land transactions either by conveyancers and solicitors or by clients of conveyancers and solicitors who have been referred to Patrick Cannon. Please visit our contact page to see how we can help.