Investigation by regulator uncovers solicitor’s part in SDLT avoidance scheme
An unnamed solicitor has been ordered to pay £4,000 in fines and costs after an investigation by the Solicitors Regulation Authority (SRA) found that she and her former firm had knowingly enabled clients to avoid Stamp Duty Land Tax (SDLT).
The investigation revealed that, between September 2009 and February 2012, the anonymous defendant and the practice she formerly worked for had enabled as many as 47 clients to avoid SDLT payments.
Both were found to have facilitated two SDLT avoidance schemes:
- “Deeds of Novation” – under which purchaser clients became “substitute purchasers” following the novation of agreements between the seller and a third party corporate entity, and:
- “Option Agreements” – under which seller clients executed option agreements granting a third party corporate entity an option to purchase a property between the fifth and 21st anniversaries of the sale at a pre-agreed price.
The SRA’s investigation report also suggested that the firm had unlawfully advertised the two schemes in direct mail and advice letters to its clients.
An SRA spokesperson said: “[The solicitor involved] did not tell her lender clients that the purchaser client was using an SDLT scheme to avoid paying SDLT, nor did she tell the lender clients how the transactions were structured”.
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