London Law Firm Fined After Failure to Disclose Tax Avoidance
The Solicitors Regulatory Authority (SRA) has imposed a fine to a law consultancy firm established in London because of involvement of buyers in the tax evasion schemes without informing the sellers of the properties being sold.
Within 28 days, the firm named as ‘LZW Law’ has to pay £6,965 to the SRA and a fine of £2,000 for the offence.
In the period from April 2011 to April 2012, the authority was provided with the information about 203 cases of property dealings in which the clients were involved in the schemes in order to evade the SDLT (Stamp Duty Land Tax).
It was discovered in the investigation that the firm was itself involved in about 179 transactions and acted on behalf of the loan provider but they crucially could not inform the lenders about the buyers’ involvement in the tax evasion schemes.
For the additional work to facilitate the tax evasion schemes for the buyers, the firm charged fees between the range of £250 and £500.
The firm had been unsuccessful in providing guidance to the buyers about the risks of involving in tax evasion schemes and/or its effects on the prospective property-related dealings.
SRA found that the firm presented itself in the matters of conflicts between buyers’ and sellers’ interests in the transactions consisting of loan and mortgage. In the situation where the firm carried separate responsibilities for acting in best interests of buyers and lenders in a single transaction, this led to a strong conflict of interest among the buyers and the lenders.
LZW held that since March 2013, it has stopped involving in the tax avoidance scheme. The firm further alleviated that it had sophisticated clients who had already taken all the necessary pieces of particular advices regarding the dangers of the schemes before the firm instructed them so.