The Telegraph reports on 11 August 2016 that purchasers of properties with annexes (or granny flats) are being told by their conveyancing solicitors that they will have to pay increased levels of Stamp Duty when, in fact, this is not the case.

In April 2016 HMRC introduced a short lived rule change that stated properties with annexes or granny flats attracted additional SDLT (Stamp Duty Land Tax) up to 3% on top of the usual level. This rule was quickly changed following a public outcry into the additional tax. The Telegraph report, however, states that solicitors are not aware of this change of mind by HMRC and are advising clients that they will need to pay the additional 3%.

Professional advisers in property transactions

A conveyancing solicitor is under a general duty of care to ensure that they are up to date with law and also to explain to a purchaser of a property the likely costs in doing that. Furthermore a solicitor’s terms of business should also set out what they agree to do for a purchaser of property, and this usually includes advising on the level of Stamp Duty payable. As such, a conveyancing solicitor will have both contractual and tortious duties to their client. Following on from this if they get their advice wrong at any stage of the conveyancing process (more specifically they breach the duties referred to above) and this, in turn, causes their client a loss then that client will (with the help of a specialist professional negligence solicitor) be able to recover that loss.

In this instance Telegraph readers were told to pay an additional £27,000 which they had not expected nor budgeted for. The Telegraph reports that some clients were even being asked to sign disclaimers that any additional tax liability was theirs. The changes in the SDLT regime were extremely well documented, particularly the volte face by the government about the 3% additional charge. As such, the solicitors should have been alive to this and therefore, advised the clients there was no need to be concerned about that additional charge.

Duty of care

On these facts then those readers would ordinarily have a claim against their solicitor for the additional £27,000 they were told to pay to HMRC. Thankfully, however, HMRC were able to refund the money as it should never have been paid in the first place. In other cases individuals are not so fortunate.

This story highlights the problems many purchasers (and sellers) face on a daily basis with their solicitor. If you believe your solicitor has caused you to suffer a loss when acting on your behalf in the purchase or sale of a property then it would be worthwhile talking to a specialist solicitor to see if you could recover that loss from them. Often such an action can resolved quickly and relatively inexpensively in a claimant’s favour.