STAMP DUTY IS A TAX NOT A LEGAL PROCESS - IT SHOULD BE TREATED THAT WAY
Stamp duty is one of the most complex and contentious parts of buying property. Recent headlines involving Angela Rayner have thrown its flaws, and the role of conveyancers in it, into sharp focus.
As a conveyancer, we discuss stamp duty every day with colleagues and clients. It is part of almost every transaction we handle, and yet, despite its importance, the system is riddled with complexity and places responsibility in the wrong hands.
The Role Of Conveyancers
When a property transaction completes, the conveyancer has a duty to submit a Stamp Duty Land Tax return to HMRC. This return sets out the key facts about the transaction:
The purchase price
The buyer’s circumstances such as first-time buyer, second home or company purchase
Any applicable reliefs or exemptions
We fill out the return based entirely on the information the client provides to us. We are not investigators, we are not accountants, and we do not verify the accuracy of the information beyond the scope of the transaction itself.
Once that return is filed, the tax due is calculated. HMRC may then check and, if necessary, challenge the figures. Our role is administrative, making sure the form is completed and submitted on time so the transaction is not delayed.
Where Problems Arise
Here lies the problem. While we are required to complete and submit tax returns, conveyancers are not tax advisers. Stamp duty is fundamentally a tax. It is not a legal process, and yet the legal profession is made responsible for its collection.
This exposes conveyancers to blame and criticism when disputes arise over how much tax should have been paid. In reality, we are simply middlemen in a process that should sit with qualified accountants.
As the Angela Rayner case demonstrated, what a client tells us at the outset is not always the full picture.
A buyer may describe a property as their main home, when in fact they own another residence
Someone may overlook a detail like buying through a company or trust, which changes their liability
Others may assume an exemption applies to them when it does not
In some cases, those differences can amount to tens of thousands of pounds, but none of this is something a conveyancer is qualified or expected to audit.
Stamp Duty’s Growing Complexity
Over the years, stamp duty has become increasingly complex. There are multiple thresholds, higher rates for second homes, exemptions for first time buyers and surcharges for non resident purchasers. The rules change regularly with each Budget, and reliefs are narrowly defined. This is a system designed for tax professionals to interpret, not conveyancers.
The rules change regularly with each Budget, and reliefs are narrowly defined. This is a system designed for tax professionals to interpret, not conveyancers.
A System In The Wrong Hands
Founding Partner of PCS Legal, Stuart Forsdike, says:
“My professional view is clear. It is extraordinary that conveyancers are expected to act as unpaid tax collectors. The current system burdens the legal profession with responsibility for something outside its expertise and leaves us exposed when disputes arise.
The responsibility for assessing and advising on tax should sit firmly with accountants. Conveyancers should focus on what we are trained to do, ensuring the legal transfer of property is accurate, efficient, and secure.”
The Case For Reform
The Rayner case was just one high profile example of a problem we see every day. It highlights both the risks for buyers and the professional pressures on conveyancers, but most importantly, it should prompt a wider debate.
Why are conveyancers being used as the vehicle for tax collection in the first place? It is a system that leaves the profession exposed to criticism, when in reality the responsibility for tax advice and compliance should sit with qualified accountants. That is the conversation we should be having.
Stamp duty is a tax not a legal process. It is time the system treated it that way.