New VAT charge on local authority searches to cause home move delays, says Law Society
Rumoured HMRC introduction intended to create level playing field
Property buyers must now pay VAT on local authority searches, The Law Society has warned, and some home moves may face delays in the coming weeks as a result.
Rumours have been circulating among conveyancers during the run up to the New Year that from 1st January VAT will be added to fees charged for local authority searches, but so far HMRC has refused to confirm or deny these rumours. This, The Law Society says, may cause delays as conveyancers attempt to find out whether or not VAT should be added to bills.
“Despite requests for clarification, we have yet to receive a formal response from HMRC about the proposed introduction of VAT on local authority conveyancing searches,” says Law Society president Robert Bourns (pictured).
“A lack of clarity around conveyancing processes and costs helps no one and we are asking HMRC urgently to explain if, and if so, how and when these changes will come into effect. Even small delays in the home buying process can have big consequences, including the possibility of a sale falling through, causing enormous stress for consumers.
“Property buyers and their solicitors need certainty, so they can focus on completing the transaction quickly and with minimum fuss. Clear, consistent, and well-signalled rules let everyone get on with their jobs, and HMRC needs to provide the property market with that certainty as soon as possible.”
It is thought that the introduction of VAT on local authority searches is designed to create a level playing field within the industry, as private providers of local authority searches must already add VAT to their customers’ bills.
The Law Society has told The Negotiator that although the proposed changes took effect on January 1st, some local authorities who are not ready to charge VAT have until 31 March to get ready.
James Sherwood Rogers, chairman of the Council of Property Search Organisations (pictured, right), says his organisation has “engaged with HMRC over many years seeking resolution to the unacceptable position whereby Local Authorities have enjoyed a price advantage in offering the CON29 [Law Society forms) to conveyancers and their clients”.
