Stamp Duty Mistake by Your Conveyancer: Can You Claim Compensation?

Stamp Duty Land Tax is usually the largest cost of a purchase after the price itself, and liability for the return sits with the buyer, not the lawyer who files it. This guide explains when an SDLT error by a conveyancer is actionable negligence, how to recover the tax from HMRC first, what damages are recoverable, and the deadlines that quietly extinguish good claims.

SDLT looks mechanical, but it is one of the most error-prone parts of a conveyancing file: rates reverted in April 2025, the additional dwellings surcharge rose to 5% on 31 October 2024, and Multiple Dwellings Relief was abolished on 1 June 2024. Because the return is a self-assessment, HMRC pursues you for any shortfall, not the firm that got it wrong.

If your conveyancer overpaid SDLT, underpaid it, missed a relief or filed late, you may have a claim in contract and in tort. Our professional negligence solicitors and barristers regularly bring claims against conveyancers and property lawyers, working alongside our in-house HMRC tax disputes team where the tax position still needs fixing.

Common SDLT Mistakes Made by Conveyancers

The errors we see repeatedly on property professional negligence files include:

• Missing First-Time Buyer Relief: 0% to £300,000 and 5% to £500,000, with relief lost entirely above £500,000.
• Wrongly applying the 5% higher rates: For additional dwellings where the purchase in fact replaced the buyer’s only or main residence.
• Failing to advise on a surcharge refund: Where the former main residence is sold within 36 months.
• Missing a mixed-use classification: Where the land has a genuine commercial element and the 5% non-residential ceiling applied.
• Mishandling linked transactions: Like chargeable consideration, or the six-or-more-dwellings election on portfolio purchases.
• Misapplying the 2% non-resident surcharge: Or the flat 17% corporate rate above £500,000.
• Late filing or payment: The return and tax are due within 14 days of the effective date, with penalties and interest following automatically.
• Recommending an SDLT mitigation scheme: Without warning of the risk of an HMRC enquiry or COP8 investigation.

When Is an SDLT Error Professional Negligence?

Not every mistake is actionable. You must show a duty of care, a breach, and loss caused by that breach the framework set out in our professional negligence FAQs. The standard is the reasonably competent conveyancer, not perfection.

The decisive question is usually the scope of the retainer. In Minkin v Landsberg [2015] EWCA Civ 1152 the Court of Appeal confirmed that a solicitor’s duties are shaped by what they were retained to do, but that risks noticed while performing the retainer must still be flagged, the “dog that did not bark” principle applied in Credit Lyonnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch).

Tax is not automatically outside the retainer. In Hurlingham Estates Ltd v Wilde & Partners [1997] STC 627 a solicitor who failed to alert a client to the tax consequences of a transaction was held liable, the court rejecting the argument that tax could be left to the accountant where the retainer was not expressly limited. The counterweight is Mehjoo v Harben Barker [2014] EWCA Civ 358: there is no free-standing duty to volunteer specialist tax advice outside the engagement. In residential conveyancing, calculating and filing the SDLT return is part of the standard service, so an error will usually fall squarely inside the retainer. Where a separate adviser was engaged, the claim may lie instead against negligent tax advisers or negligent accountants. Further authorities appear in our guide to key negligence case law.

Step One: Reclaim the Overpaid Tax from HMRC

Before suing, the overpayment should be reclaimed if it still can be. The law requires reasonable steps to mitigate, and in Walker v Medlicott & Son [1999] 1 WLR 727 the Court of Appeal held that a claimant who ignores a cheaper route to put matters right may recover nothing from the professional. The SDLT routes are:

• Amending the return within 12 months of the filing date (para 6, Sch 10, Finance Act 2003).
• Overpayment relief within four years of the effective date of the transaction (para 34, Sch 10, Finance Act 2003).
• Higher rates refund where the former main residence is sold within 36 months claimed within 12 months of that sale or of the filing date, whichever is later.

If the tax is repaid, the negligence claim narrows to interest and the cost of the reclaim. If the window closed because of the conveyancer’s delay, the whole overpayment becomes recoverable damages. Our HMRC tax solicitors and barristers can run the reclaim in parallel so neither deadline is lost.

Underpaid SDLT: Assessments, Penalties and Interest

Under-declared SDLT is often worse. HMRC can raise a discovery assessment within four years, extended to six for careless behaviour and twenty where the loss of tax was deliberate, with interest running throughout and HMRC penalties charged by reference to behaviour and disclosure. You remain primarily liable, so the first task is to manage the HMRC investigation, challenge excessive penalties on appeal or internal review, and if necessary proceed to the First-tier Tax Tribunal. Where a corporate buyer faces enforcement, HMRC may escalate to a statutory demand or a winding-up petition our insolvency litigation team deals with those urgently. Penalties, interest and costs attributable to the conveyancer’s error are then recoverable as damages.

What Compensation Can You Recover?

Damages are compensatory: you are to be put in the position you would have occupied but for the breach. Two principles control how far that reaches. Following South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191 (SAAMCO), restated by the Supreme Court in Manchester Building Society v Grant Thornton UK LLP [2021] UKSC 20, a professional is liable only for loss falling within the scope of the duty assumed the tax consequences of the error, not an unrelated fall in the market.

Recoverable heads typically include irrecoverable SDLT, penalties and interest, the costs of an HMRC enquiry or appeal, abortive transaction costs and, in appropriate cases, the price differential you would have negotiated. Expect the insurer to run contributory negligence and failure to mitigate.

Time Limits: Do Not Lose a Good Claim

The primary limitation period is six years from accrual (s.2, Limitation Act 1980). In SDLT cases damage usually crystallises on completion, when the liability is assumed and the tax paid the principle in Forster v Outred & Co [1982] 1 WLR 86 that entering a transaction under which you take on an onerous liability is itself actionable damage. Where the error surfaces later, s.14A may allow three years from the date of knowledge, subject to the fifteen-year longstop in s.14B, and s.32 can extend time for deliberate concealment. These arguments are fact-sensitive and frequently decisive: see our guidance on the limitation period in professional negligence claims.

How a Claim Against Your Conveyancer Proceeds

A claim must follow the Professional Negligence Pre-Action Protocol: preliminary notice, a detailed letter of claim, then time for the firm and its insurer to respond. If it does not settle, proceedings are issued with carefully drafted statements of case, our guide on how to start a professional negligence claim sets out the sequence and the evidence required.

Recovery is rarely a practical problem: SRA-regulated solicitors hold minimum cover of £3 million and CLC-licensed conveyancers carry equivalent compulsory insurance. Even where the firm has closed, run-off cover and direct claims against insurers usually remain, see Solicitor’s Firm Closed or Collapsed: Can You Still Claim?. Our successful claim against negligent conveyancers shows how these cases resolve in practice.

Speak to Our Professional Negligence Litigation Team

LEXLAW is a City of London firm of qualified solicitors and barristers in Middle Temple, adjacent to the Royal Courts of Justice. We act in high-value professional negligence disputes and run an in-house HMRC tax disputes practice, so the tax position and the negligence claim are handled together.

If your conveyancer has made a stamp duty mistake, act before the reclaim and limitation deadlines expire. Call 020 7183 0529 or complete our litigation case assessment form. Please note we do not provide free legal advice and do not take on low-value claims.