A lack of tech-enabled accuracy is leading to an alarming number of stamp duty mistakes, according to SDLT Compass.
The firm says that across the industry, law firms are facing an increase of 20-30% on annual professional indemnity (PI) premiums due to the errors. PI insurance is a type of business insurance that covers you for costs if you make a mistake in a piece of work for a client that causes them financial or reputational loss, in other words if a law firm makes the wrong SDLT calculation and asks their client to pay too much.
These higher PI premiums are driving down the incentive to generate new business and posing a viable threat to the future of many firms. With this in mind, SDLT Compass has been launched to provide fully indemnified council. This means zero risk to the solicitor, as Compass takes the entirety of the responsibility as a fully accurate Stamp Duty calculator.
Residential conveyancing remains the area of practice where most insurance notifications are received, with residential and commercial cases combining to represent 51% of all cases, according to the firm, which adds that the increase of last minute transactions as the Stamp Duty Holiday ends, and the incredible amount of purchases completed during the last year, will only increase the difficulties and stress faced by the legal industry.
The SDLT problem
Each year, an estimated £2bn of SDLT is overpaid to HMRC due to the complicated and often confusing nature of the tax. In the last year, just one of many stamp duty advisory firms has successfully recovered over £14m on behalf of its clients, the majority of which are individuals incorrectly paying thousands of pounds of unnecessary tax.