London law firm fined after failure to disclose tax avoidance
LZW Law fined £2,000 and must pay £6,965 in costs after failure to disclose tax avoidance activity
A LONDON-BASED law firm has been fined by the Solicitors Regulatory Authority (SRA) after it emerged a series of property deals took place where lenders were not informed that the buyer was involved in a tax avoidance scheme.
LZW Law has been fined £2,000 for the transgression and must also pay SRA costs of £6,965 within 28 days.
The firm provided the regulator with information concerning 203 conveyancing transactions between April 2011 and April 2012 in which clients had been linked to schemes designed to avoid stamp duty land tax (SDLT).
Upon investigation, it was discovered 179 transactions took place in which the firm also acted for the mortgage provider, but crucially failed to notify lenders of the buyers’ use of SDLT schemes.
Purchaser clients were charged between £250 and £500 for the extra work in facilitating the schemes.
The firm also failed to advise clients on the dangers of engaging in SDLT avoidance schemes or its impact on future property deals.
In its findings, the SRA said: “The firm acted where there was a conflict between the interests of the lenders and buyers in those transactions involving a mortgage. A conflict or significant risk of conflict existed between the lenders and buyers because the firm owed separate duties to act in the best interests of both the lenders and buyers in relation to the same transactions.”
LZW said it had ceased operating the schemes as of March 2013. It added in mitigation that its clients were “sophisticated investors who had all taken specific advice as to the risks of the schemes before instructing the firm”.