Q I have received money from a client to cover stamp duty land tax and Land Registry registration fees. The money is in client account, but I wish to transfer it to office account and draw cheques on that account to meet these payments. Are there any problems with this?


A There are potential problems in complying with the Solicitors' Accounts Rules 1998. Money received for the payment of stamp duty land tax (SDLT) and Land Registry fees is client money (rule 13, note (i)(c)) and must held in a client account (rule 15).



Rule 22(1)(b) permits the withdrawal of client money from a client account when required for payment of a disbursement on behalf of the client. Standard practice is to pay both SDLT and Land Registry fees by cheques drawn on the client account.


Rule 22(1)(c) permits the withdrawal of money from client account when it is required to reimburse a solicitor for money spent on behalf of the client. Money is 'spent' when the solicitor despatches the cheque (rule 22, note (ii)). Therefore, it is possible to pay SDLT and Land Registry fees from office account, but the transfer of funds from client to office account to may properly be made only when the appropriate cheques have been sent to the Inland Revenue and Land Registry. However, this is not normal practice and it involves additional bank transfers and bookkeeping entries.


It is a serious breach of the 1998 rules, and of a solicitor's duties to his clients, to draw cheques on office account, transfer funds from client to office account, and then delay sending the cheques to the Inland Revenue and the Land Registry. The solicitor has not spent the money until the cheques are sent and therefore, cannot rely on rule 22(1)(c) to justify the withdrawal of funds from client account.



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