24/01/2017
A surprise move by HMRC has seen local councils impose vat on searches.
Council searches, carried out on the Law Society’s CON29 and CON29O forms, provide information for buyers and lenders on issues surrounding planning decisions, building regulation consents, highway information, road schemes and public footpaths. The forms contain standardised questions to make conveyancing searches quicker and more efficient for both local authorities and buyers.
Although HMRC has not been clear in its reasons for the change, it’s widely believed that it is to level the playing field between local authorities and private search organisations (PSOs), which already add vat to their searches.
The move was introduced on the 1st January, however, not all councils have implemented the change. This has left conveyances having to verify with each authority before submission to check whether fees have increased.
Lee Holehouse, head of operations for Russell & Russell’s conveyancingdepartment, said: “While it makes sense to even the market out, it’s frustrating that despite various attempts made by organisations across the legal sector to clarify the situation, HMRC would neither confirm nor deny the changes were coming in. This has resulted in the onus being put on conveyancers to check whether local authorities are imposing the increase, which just adds to the time it takes to purchase a property. Even the smallest of delays in the process can have huge consequences and I would have expected HMRC to understand this and be transparent rather than creating unnecessary confusion.”
Please note that this article is meant as general guidance and not intended as legal or professional advice. Updates to the law may have changed since this article was published.