Regulatory & Compliance

Home » Regulation & Compliance

What is Anti-Money Laudering?

Solicitors have very strict obligations to ensure that they can verify not only the identity of their clients but also the validity of any money which flows through their bank accounts.  While we appreciate that this can seem like a bit of a nuisance at times the regulations which cover these issues exist to prevent individuals from using property transactions to legitimise or “launder” funds which have been generated via criminal activity and ultimately to keep us all that bit safer.

Client Identification

Every client of Delaney Graham requires to submit to us two forms of appropriate identification, one verifying their name and the other verifying their address, before their transaction can progress.  We will then electronically confirm their identity via an online verification process.  Ideally, we always prefer to meet with our clients in person, not only for identification purposes but also because we want to make our service more personal than simply being a voice at the end of a telephone or a name at the end of the internet!

Verification of Source of Wealth/Source of Funds

We require to see evidence not only that funds have been sent to us from a bank account in our client’s name but also where those funds have ultimately come from (the origination of the funds).  This may involve the production of bank statements going back a period of months, confirmation from other law firms of previous property sales or inheritance payments, evidence of investment or pension payments, etc.  If funds have been gifted to our client, we will also need to establish the identity of the donor, your relationship to them, and be able to see a full paper trail for those funds.  When a client has transferred funds to our bank account, we will also require to see a bank statements to show that each payment of funds has come to us from an account in the name of our client.  We require to assess each transaction on a case by case basis and to satisfy ourselves depending on the circumstances of the funding for each individual transaction.

Please note that funds which originate in certain overseas countries may require us to carry out enhanced due diligence.

Taxes on Property Purchases

Nobody likes paying taxes but unfortunately they are a necessary evil which affects many residential property purchases.  These are personal taxes which fall into the two categories of (a) Land & Building Transaction Tax & (b) Additional Dwelling Supplement.

What is Land & Building Transaction Tax?

Land & Building Transaction Tax (or LBTT) replaced Stamp Duty in Scotland a number of years ago.  As the name suggests, this a tax on property purchases and requires to be paid to Revenue Scotland by your solicitors upon settlement of your purchase and it is calculated in a sliding scale, depending on the purchase price being paid.

The general rule is that any residential property purchase at a price of over £145,000 will be generate an LBTT liability.  There is presently an exemption on LBTT for transactions where each purchaser is a first-time buyer (ie someone who has never owned a property anywhere in the world) and where the purchasers intend to occupy the property as their only or main residence.  If purchasers qualify for this first-buyer relief they will only pay LBTT on any portion of the purchase price over £175,000, which is a potential saving of up to £600.

What is Additional Dwelling Supplement?

Anybody purchasing a second property at a price of over £40,000 will also be liable to pay a tax called Additional Dwelling Supplement (or ADS).  This is in addition to any aforementioned LBTT which might be due.  ADS is calculated at the rate 6% of the full purchase price and, again, this requires to be paid to Revenue Scotland by your solicitors upon settlement of your purchase.

Additional Information

Where the purchase price is over £40,000 your solicitors will require to submit a form to Revenue Scotland following settlement of your purchase with details of the transaction.  This form requires to be submitted regardless of whether LBTT or ADS are payable.

You can check how much LBTT and ADS will be due on your purchase by following this link to Revenue Scotland’s tax calculator:- https://revenue.scot/calculate-tax/calculate-property-transactions.

If you are in any doubt about whether you require to pay LBTT or ADS based on your circumstances you should contact Revenue Scotland directly to confirm the position.