Lawyer Sanctioned For Non Payment Of Stamp Duty

Lawyer Sanctioned For Non Payment Of Stamp Duty

On 3rd August 2022 news hit the legal headlines of a lawyer and legal firm proprietor who had been sanctioned by way of a fine of twenty thousand pounds.

Why Was The Lawyer Sanctioned?

In many transactions, stamp duty land tax and a land registry fee should be paid and in this case, a firm had received instructions to act on behalf of a property purchaser. All appeared to have been progressing well with the transaction until an invoice was uncovered signed for an amount over three thousand pounds which took account of payments of the requisite land registration fees and stamp duty payments in relation.

In two thousand and eighteen which was around five years after the original property transaction the original purchaser and now registered proprietor of the provided instructions for the firm to act on the sale of the property. Contrary to the normal course of property transactions and inexplicably none of the usual payments of stamp duty land tax (SDLT) or Land Registry fees had been paid. The lawyer with the conduct of the file took action immediately to proceed to pay the shortfall and restore the client’s account cash shortfall.

This Is All Very Well…But Was There Any More Evidence?

When the internal client accounts were examined the client account records appeared to show a transfer of monies that had taken place from the sacrosanct account which held monies belonging to the client to the office account. The Solicitors Regulation Authority through the medium of the Solicitors Disciplinary Tribunal was presented with evidence from over five years across just short of twenty files whereby excessive payments from twenty-five pence to around one thousand pounds had been paid from the firm’s account holding client monies.

Closer inspection of account records revealed that the law firm violated the Solicitors Regulation Authority’s requirement that monies held in the client account should be sent back to the client from the moment there are no grounds for holding it.

The client account shortfall was over three thousand pounds more than was expected and the client account deficit stood at around four thousand five hundred pounds. There was a disparity between the payments which had been made and the outstanding ones. The lawyer provided the SRA report setting out nearly two thousand matters which were progressing at a less than glacial pace for more than twelve months. Investigators from the Regulatory body observed that nearly two hundred files had not moved on for over one year and nine months and the account balances on the files had frozen.

The lawyer held his hands up to his part in the action and was banned from holding monies on theclient’s account or holding the office of the proprietor of any legal services provider. He was fined around twenty thousand pounds with an accompanying costs order of around fifteen thousand pounds.

Pages Turned…Lessons Learned…

Legal professionals handling client monies need to be following a strategy of:

  • acting with honesty and integrity at all times in the provision of legal services
  • complying with the Solicitors Accounts Rules as laid down by the Solicitors Regulation Authority
  • upholding the principle that providers of legal services are under strict obligations to return monies held on client accounts when it was no longer necessary.
  • ensure payments of Stamp Duty Land Tax and Land Registry Fees are made within the required time limits
  • In the event a breach is discovered do all they reasonably can to make amends within a reasonable period.

If they follow this it will reduce the risk of future lawyers being held liable for breaches of the account rules and the accompanying financial sanctions in terms of costs and fees.

The Legists Content Team

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THE ARTICLE WAS WRITTEN USING THE FOLLOWING SOURCES

[1]Hyde, John – Solicitor who invoiced for unpaid stamp duty is fined – Law Society Gazette – 3 August 2022 - Solicitor who invoiced for unpaid stamp duty is fined | News | Law Gazette

[2] UK Government - Stamp Duty Land Tax - Stamp Duty Land Tax: Overview - GOV.UK (www.gov.uk)

[3] UK Government – HM Land Registry: Registration Services Fees - HM Land Registry: Registration Services fees - GOV.UK (www.gov.uk)

[4] Solicitors Accounts Rules – Solicitors Regulation Authority - SRA | Accounts Rules | Solicitors Regulation Authority

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