Many homebuyers are facing additional stamp duty demands after their solicitors failed to hand over the full payments to the tax man.
Hundreds of people are unwittingly caught up in the scandal and left face massive tax bills which should have already been dealt with by their legal representatives.
Problems have been uncovered with a number of solicitors and conveyancing firms and in some cases, the house purchases date back several years.
The homebuyers apparently paid the correct amount of stamp duty to their conveyancers when buying a property, but the money was not passed on the HMRC. Those innocently affected are now being told to pay the difference, plus interest.
The conveyancers allegedly entered a lower purchase price when submitting tax returns and kept the balance of the cash.
Because buyers have a legal responsibility for the tax HMRC is approaching them for the money, even though the buyers believed they had already paid the full amount owed. Homeowners who have been hit can seek compensation from the conveyancer.
Some cases stem from a law firm called Wolstenholmes, based in Cheshire. The Solicitors Regulation Authority has already taken action against the company in 2009 and shut it down.
But one client only realised last December that her solicitor had not handed over the full stamp duty payment. She has been contacted by HMRC and told she owes nearly £10,000 because the purchase price given by the legal firm was £126,000 less than what she paid. She is claiming the money back from the legal ombudsman.
There are no criminal proceedings outstanding against the law firm’s employees, but five solicitors are facing a Solicitors Disciplinary Tribunal hearing.
The Solicitors Regulation Authority has already paid out £12.3 million in compensation for claims relating to the firm.
HMRC says it will contact homeowners if it suspects discrepancies between stamp duty receipts and the amount that should have been paid.
