An adviser has urged vigilance when calculating stamp duty, after he found a £19,000 error in a client's bill incorrectly prepared by a solicitor.
Craig Parkinson, mortgage and protection consultant at Continuum Financial Services, identified the error on a bill prepared by a solicitor in August for his client, who was moving from one residential property to another together with his wife.
As the client co-owns a separate property with his ex-wife, for which they are both on the mortgage and deeds, the solicitor believed he would incur the additional stamp duty - totalling just over £19,000.
Upon learning of the charge, Mr Parkinson advised his clients to request the solicitor reassess the stamp duty rules as because they were not increasing their property portfolio - applicant one would still have one property and applicant two would still have two properties - the normal rate should still apply.
Although eventually rectified and a correct invoice issued, Mr Parkinson said the prospect of an unexpected £19,000 bill caused the clients a great deal of stress two weeks before they were due to complete.
In 2016 and 2017, the government introduced new stamp duty rates - those purchasing an additional property for more than £40,000 incur a 3 per cent charge on top of standard rates and first-time buyers are now exempt from the tax up to a property value of £300,000.
Mr Parkinson said brokers must be sure to ask questions and ensure they are happy with stamp duty calculations, as absolute clarity on the rules is absent throughout the process of purchasing a property.
He said: "There is not a widespread 100 per cent clear understanding of the current stamp duty rules, but I do not think there ever has been to be honest.
"It just goes to show the value of advice, because there is no way a bank would have picked up on that sort of error for a client."
HM Revenue & Customs (HMRC) will refund the additional property stamp duty rate to second home owners who sell their previous main residence within three years of paying the higher rates - in the second quarter of 2018, 6,200 additional dwellings refunds totalling £80m were paid.
A HMRC spokesperson said: "Repayment is normal in the higher rates of stamp duty land tax when someone sells their old home after they buy their new one - they pay the higher rates upfront, and qualify to claim it back once they sell their old home."
rachel.addison@ft.com
