British pensioners are likely overpaying billions of pounds due to miscalculations in Stamp Duty, according to new research.
This is a tax people sometimes need to pay if they buy a residential property or piece of land in England or Northern Ireland.
Stamp Duty is paid on residential properties which cost over £250,000 unless someone qualifies for first-time buyers’ relief.
Cornerstone UK has reportedly uncovered an error in the overpayment of the levy due to property transfers into pension schemes.
According to the property tax specialists, some financial advisors have told their clients to pay Stamp Duty when, in fact, they do not need to.
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Based on figures released by Cornerstone UK, up to 75,000 people could be owed compensation of up to a staggering £80,000 each.
Errors are said to have been made when solicitors mistakenly assumed that Stamp Duty Land Tax (SDLT) must be paid on the transfer of property from multiple owners into Small Self-Administered Schemes (SSASs) and Self-Invested Personal Pensions (SIPPs).
So far, Cornerstone has received 50 refunds from HMRC on behalf of clients for this error and has a 95 percent success rate across all Stamp Duty refunds.
The organisation estimates that the compensation due from HMRC and solicitors to pension holders affected could amount to nearly £6billion in total.
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Speaking exclusively to the Daily Express, group chairman of the Cornerstone Group David Hannah, shared what reform needs to be brought in to avoid similar mistakes from taking place again.
He explained: “Pension members should be given the right to seek independent tax advice from appropriately qualified and insured specialists over property purchases and not forced to rely on solicitors often selected from a panel mandated by their pension provider.
“Considerable difficulty has been caused in making reclaims from HMRC and claims against solicitors by the pension companies reluctance to authorise such actions leading to an exacerbation of losses by pension schemes.
The property tax expert highlighted what homeowners and businesses should be doing when it comes to Stamp Duty.
Mr Hannah added: “(They) need to be particularly careful when relying on their conveyancer to calculate stamp duty. Many conveyancers believe, incorrectly, that this is a purely administrative task and that HMRC‘s ‘calculator’ can be relied on.
“Stamp duty is way more complex than this and an incidence of errors in Stamp Duty Returns by solicitors conveyancers of over 30 per cent points to a poor understanding of the tax and its complexities combined with superficial attention to the detail which is vital in getting the calculation right.”
In a statement, HMRC stated: “’SDLT is due when property is transferred to a pension fund in the majority of cases. There are only very specific and limited circumstances when it is not due.”
