Strange Situation for Higher Rate SDLT

[Sashxxx]

Yes, I did also think that maths. As SDLT is a self-assessment tax why would I need to convince the conveyancing solicitor. I also thought about just asking the Solicitor if I could complete the SDLT1 form myself and not involving him at all when I purchase a new house – surely just one less thing for him to do! I filed my own divorce from start to finish and avoided thousands of pounds of fees; so I am thinking maybe this isn’t too dissimilar of a task to do myself.

In fairness the SDLT Solicitor did say that the conveyancing Solicitor would probably not need a report and would just accept me stating references to statutory provisions and paragraph numbers from the guidance. But as this is just information already in the public domain, I’m not sure I’m prepared to pay such a fee for it!

[Sashxxx]

Yes, I did also think that maths. As SDLT is a self-assessment tax why would I need to convince the conveyancing solicitor. I also thought about just asking the Solicitor if I could complete the SDLT1 form myself and not involving him at all when I purchase a new house – surely just one less thing for him to do! I filed my own divorce from start to finish and avoided thousands of pounds of fees; so I am thinking maybe this isn’t too dissimilar of a task to do myself.

In fairness the SDLT Solicitor did say that the conveyancing Solicitor would probably not need a report and would just accept me stating references to statutory provisions and paragraph numbers from the guidance. But as this is just information already in the public domain, I’m not sure I’m prepared to pay such a fee for it!

[maths]

I suspect you could deal with the SDLT paperwork.

Certainly the conveyancing solicitor does not need any report re SDLT. As you say SDLT is self assessed.

Typically some solicitors are "at sea" on SDLT and the 3% charge and so they simply say a client should pay the 3% that they can reclaim at a later date if it's wrong. This is not a professional approach.

Should your solicitor prove difficult supply him with legislative chapter and verse as to why the 3% charge does not apply.

[Sashxxx]

... or find another Solicitor ha ha

[AGoodman]

As SDLT issues go, it's only middling difficulty and I would hope most conveyancers could deal with this and should have seen it before. You can quote FA 2003 Sch 4ZA Para 3(5)-(6) and the rules are straightforward.

Your previous disposal was a sale because you transferred away a 33% interest in a property in exchange for payment. The position would be the same anyway if you had gifted your interest away.

[Sashxxx]

Thanks so much for the reply Agoodman Hugely appreciated.

I have just downloaded a copy of the Title Register off Land Registry and it doesn't show my name or % interest in the property. Maybe this is the wrong document?. It just shows the dates under a header "Title absolute" that we took out the joint mortgage in 2018 and when he took out the new mortgage back in his own name in 2019 and I was removed.

I contacted the conveyancing Solicitor who dealt with adding me on in 2018 and she said she would just need to see me being transferred off the property in 2019 and she could get that from Land Registry. We completed a TR1 Land Registry form when taking me off the mortgage, I assumed this was me transferring my interest in the property back to him?

This is what is says on the document I have just ordered online...

1 (07.11.2019) Mr xxxxx, address
2 (20.08.2018) The value stated as at the 20 August 2018 for the land in this title and in SFxxxxx was £xxxxx
2 (07.11.2019) The transfer to the proprieter contains a covernant to observe and perform the covenamts referred to in the charges register and of indemnity in respect thereof

But then it also doesn't make any reference his ex-wife who he jointly owned it with until 2012 when she was removed.

[AGoodman]

The Land Register only shows the current position, not the historical transactions. If you really need it, HMLR probably have copy of the TR1. It may be available online under "other documents" or similar or you may need to call them.

[Sashxxx]

Phew thanks AGoodman... I was starting to panic then that I'm wrong and will have to pay the HRAD SDLT after all.

I am assuming that as the conveyancing Solicitor I have contacted to deal with my new purchase is the same lady who added me onto the previous property in the first place that she's knows the legal position and wouldn't be saying that all she needs is to see me being transferred off the property. I'm praying so anyway.

[maths]

If the transfer in 2017 simply added you to the legal title and a party to a mortgage without giving you a beneficial interest of the 33% to which you refer this would I believe still result in you acquiring a "material" interest in the property as defined in FA 2003 s 117 (which includes a legal interest) (see also Sch 4ZA para 2(4)) with the consideration being the assumption of debt (ie the mortgage). In which case, your removal from the legal title and mortgage in 2018 would be a disposal of a "material" interest which means satisfaction of Sch 4ZA para 3(6) and hence no 3% surcharge.

[Sashxxx]

Thanks maths... I'm going to try and call LR to ask the question. I can't seem to get a copy of anything online to show me being transferred off, although the Conveyancing Solicitor can as she's quoted that as part of the legal fees quote for the new house... only £3 mind!

I know tax doesn't always seem "fair" as such to many people but I have spent the last year thinking just how unfair it is that if I buy a residential property for £225k I have to pay £8500 and not the £1900 other people would pay, especially as my BTL property is only worth £115k and I have owned it since 2002, long before these rules came in. But I'm 99% sure now I am not liable for that.

HUGE thanks to you both for your replies, really appreciate all of your advice and referencing to the HMRC manual... This site has been hugely helpful on this point and on the tax on my BTL post, too