6 reasons you should avoid using the HMRC Stamp Duty Calculator
SDLT Compass has written a blog on the subject of using the HMRC Stamp Duty Calculator, giving 6 reasons why it should be avoided.
‘If you’re good at something, don’t do it for free’, so the old saying goes. The corollary must surely then be ‘If something is being provided for free, it can’t really be that good’.
HMRC’s Stamp Duty Calculator is provided free for any firm or individual to use, but does it really provide the full picture?
Here are six reasons why we think you should avoid it:
1. Lacking in Details
Having spent hours entering various test cases into HMRC’s online calculator as part of our own research, we discovered it was even less comprehensive than we had initially feared. Properties which could be mixed use, properties which may have an annexe and many more were simply missed altogether, meaning that potential SDLT reliefs were also being missed.
One look at the introductory text above the calculator itself sums up the problem – ‘The calculator will work out the SDLT payable for most transactions.’ (our emphasis).
2. An awkward mess to use
HMRC’s calculator is almost the definition of user unfriendly. The limited questions it asks of the user leave out a number of factors relevant to the calculation of Stamp Duty.
The first question it asks is whether or not the property is leasehold, with a clarification which states you are only to tick yes if it’s an acquisition of a new lease. That may be clear to an experienced conveyancing practitioner, but to the average member of the public? Useless.
3. It won’t protect you
SDLT is a self-assessed tax for which the purchaser is directly liable – something which few people really seem to understand. That means when it’s done wrong, your clients can end up with a large bill including added interest. It’s unlikely they’ll be happy, and as you submitted the return on their behalf, that unhappiness is likely to manifest in your direction.
HMRC’s calculator, full of loose terminology and phrases designed to eschew any and all liability, will provide you with zero protection against any claims made for errors. The responsibility as far as the client is concerned will rest solely with you.
4. Errors don’t just impact you and your client
In 2017 Advanced Mortgage Funding provided mortgage advice to clients buying an additional residential property. At the last moment in the transaction, the clients found their SDLT liability was much higher than they had initially been advised, and were forced to take out additional borrowing to preserve the completion. In 2019 the Financial Ombudsman Service ordered the payment of compensation in the order of £30,000 to a client by Advanced Mortgage Funding.
Why? Because AMF were deemed to have provided advice upon which their client was entitled to rely. How had they arrived at this ‘advice’? They had called a local solicitor with whom they regularly conducted business who had given them a figure, most likely obtained by using the SDLT calculator. In the current marketplace, can you really afford to risk networking relationships like this?
5. Merely ‘a guide’
HMRC are on record in the Times newspaper describing their calculator as intended merely ‘as a guide’ rather than a comprehensive tool.
This was (ironically) in response to comments made with regards to the efficacy of the calculator itself and how this related to the large number of cases of overpaid SDLT which occur each year in the U.K.
6. There is a better way
The biggest and most persuasive reason to not use the HMRC calculator is that a better solution exists.
Compass asks comprehensive questions designed to ensure every relevant variable is accounted for, and can be easily integrated into your firm’s existing systems. Especially tricky scenarios will be referred to a dedicated team of expert adviser for cross-checking.
Using Compass means that the responsibility for the calculation is outsourced from your firm. As Compass is fully PII-backed, you can rest-assured that it provides your clients with a meaningful guarantee. It’s also constantly monitored and updated in line with the latest changes to SDLT legislation.
Compass is fast, smart, comprehensive, and takes the burden of Stamp Duty Calculation away from your firm The real question is, why wouldn’t you use it?
Kindly shared by SDLT Compass
Main photo courtesy of Pixabay