Unless the solicitor is able to produce a cogent counter argument to the contrary he/she has no grounds for forcing you to incur the additional 3% charge. A suggestion from him/her that you could pay the 3% and then reclaim if appropriate is not a satisfactory response. A confirmation from you in writing as to the nature of your position re the Italian property together with the above argument should be sufficient to cover their "backside" which is in effect what they are worried about.
My solicitor is indeed insisting that I'm wrong about the SDLT.
This was their answer:
"I refer to previous correspondence in connection with the Stamp Duty Land Tax payable in your purchase of the above property.
You have indicated that you are the bare-owner of a property in Siena, Italy, the value of which is around £200,000 and that the usufruct owner lives in the property. I understand that under Italian law you would have to prove the property was purchased using your own money in order to avoid paying Inheritance Tax. This firm has not come across a usufruct arrangement before (nor would we ordinarily expect to do so as conveyancers in England and Wales) but it appears from what you tell me that you may have a major interest in another property for the purposes of SDLT. The analogy to a ‘bare trust’ is perhaps too simplistic as a ‘bare trustee’ in English law has no interest whatsoever in the proceeds of sale. The information provided indicates that whilst the usufruct owner has the right to live in the property, you would be entitled to some of the proceeds if it was sold in the future. I may have misunderstood your interest in the Italian property and the Italian law and, if so, please let me know.
Stamp Duty Land Tax is a self-assessment tax payable when a property is purchased in this country. There is an obligation to pay an additional higher rate of tax if the person buying the property has an interest in another property in the United Kingdom or anywhere else in the world.
You are of the opinion that the extra Stamp Duty Land Tax will not be payable. From the information provided we question whether this is correct but we are not tax experts and have advised you to seek specialist advice. I am acting as your Agent and it will be necessary for me to submit assessment to HM Revenue & Customs. As this is a self-assessment tax you will be liable for any incorrect statements made to HMRC.
In the circumstances you can either obtain professional advice from a tax adviser or solicitor specialising in Stamp Duty Land Tax payments and provide a copy of their findings to us. Alternatively, if you are relying on you accountant’s advice to date that you are not liable to pay higher rates of SDLT, you can sign a Declaration and Indemnity agreeing to reimburse Emsleys Solicitors if we are penalised for any inaccurate statements made to HMRC."