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Fighting form
Law Society Gazette – 13 October 2005

Solicitors claim they are plagued by problems with the stamp duty land tax forms. So are these glitches the result of computer or human error? Mark Smulian investigates

Computers are fairly stupid machines. They might be able to calculate the highest prime number, send a probe to Jupiter or launch a missile, but they have no intuition.

They cannot, for example, distinguish an inkblot from a figure, and nor can they see that zero 'obviously' means the same as 'not applicable' on a form.

They cannot actually think, as solicitors who have tangled with Revenue & Customs' scanning process for stamp duty land tax (SDLT) forms can attest.

The trouble began when huge numbers of scanned stamp duty forms started to be returned to solicitors for further information. Worse, they were also copied to clients, who assumed their solicitors had fallen down on the job, or who tried to deal with the disputed questions themselves, and so caused fresh confusion.

Conveyancing solicitors found themselves at the end of a process driven by the Treasury's search for economies though the use of electronic processes across government. But now the Law Society has claimed a victory after its campaign to press the Revenue into reforms has resulted in it admitting that 15% of form rejections were caused by its machines - and promising to change the scanning process.

The land transaction return form, known as SDLT1, is six pages long and has 71 questions. All must be answered by filling in small boxes in black ink and capital letters, with boxes that do not apply left blank, nothing crossed out, and then the whole form returned without a crease on its surface.

Denis Cameron, chairman of the Law Society's electronic law committee, and immediate past chairman of the land law and conveyancing committee, describes what happened when solicitors were confronted by these forms.

'For the first nine months, there was not too much trouble, as there was a light-touch system and the forms were checked by hand at the Revenue,' he recalls. 'They said they would gradually introduce scanning, but they did it too quickly this time last year, and the proverbial hit the fan because so many were rejected.'

Some were simple errors of the wrong entry in the wrong box. But Mr Cameron, who is senior partner at Blackpool firm Cameron & Ball, cites an example of a machine error. He had a freehold transaction where some ink seeped through from one page to another, so as to make it appear as an entry in a section about leaseholds. A human would have seen the problem, but the scanner was baffled by what seemed to be both a freehold and leasehold transaction, and so rejected it.

According to Mr Cameron, most solicitors think it costs 50 to 100 each time they complete this form even if all goes well, with costs mounting when time must be spent correcting real or imagined errors.

'It was all simple when it was done in writing,' he says. 'But I do not want them to change the form now, as it has taken solicitors so long to get used to it. If they were checked by a human eye, it would be good.'

That might seem an odd sentiment for the chairman of the electronic law committee, but Mr Cameron says he is not against the introduction of technology, merely against it being introduced badly.

'The Revenue said it was all our fault, but I think they were under pressure from the Treasury because it wanted to introduce scanning as quickly as possible. It thought that would close a lot of loopholes,' he says.

He is also critical of the CD ROM that was provided. This proved a problem when the effective date of purchase had to be included: 'Nine times out of ten, the purchaser is buying with a mortgage, so you do not know the effective date, and the forms are signed before completion and you write the effective date afterwards,' he says.

That could not be done on an electronic form, as it already appeared to have been 'signed', and the work had to be repeated, he complains.

Michael Garson, chairman of the Law Society's property section and a partner at London firm Kagan Moss, says the problems of SDLT have not led to a loss of confidence among solicitors in e-systems in general. 'The problem is specific to this case, because [the Revenue] has done it all wrong. The way it has been done was too rushed and under-resourced.' Mr Garson also blames the Treasury for spending too little to make the system work, and implementing it hurriedly because it wanted revenue to flow from the tax.

'The Revenue is aware of the problems, so why can't they solve them in one go?' he asks. 'I do not know why they find it so difficult.'

The Revenue's stamp taxes business director Jim Ferguson wrote to Law Society President Kevin Martin in late August with the fruits of the organisation's review of a sample of 839 error forms - one-third of one day's output.

He said this showed 679 error letters, known as SDLT8s, were generated because of errors in completion by solicitors, while 125 were attributable to scanning errors and 35 to both scanning and completion problems.

That exercise is the origin of the Revenue's oft-repeated claim that solicitors caused 80% of the problems, not its machinery or staff. It offered to alter seven fields that had thrown up particular scanning problems, to accept zeros instead of blanks in some fields, and to improve its guidance to users.

The Revenue also agreed to shift its stance on client signatures, no longer requiring these on SDLT8 forms where SDLT1 forms authorise solicitors to handle correspondence for clients.

In another concession, it also agreed to stop sending SDLT8 copies to clients - a move that should end the confusion among clients who received these.

Mr Martin said: 'The Society is very encouraged by the changes the Revenue has introduced. The greater flexibility allowed by changes to the scanning system should result in far fewer requisitions being returned to solicitors for further information on SDLT8 forms.

'The Revenue's decision to cease the practice of sending SDLT8s to clients in most cases is also very welcome.'

But he said the Law Society was 'very anxious that practitioners continue to let us know of their experience of the system, both in terms of what's getting better, and continuing problems'.

Despite this new amity, the Revenue is a long way from admitting that it was at fault.

A spokesman said: 'It is completely incorrect to say that the system was introduced too fast or with too few resources. The bulk of the mistakes were made by solicitors, who made elementary mistakes. We have accepted some criticism and changed the form, but you find some solicitors put in a "0" when it says clearly they should leave it blank, so we have to return the forms.'

Although the Revenue is not 'seeking to spread blame', it says that solicitors have not always followed guidance. 'One complained it did not accept commas. Well, you should not put commas and apostrophes in these documents, or zeros, but plenty of people do,' he says.

The Revenue began a live test of e-filing of forms on-line in July, and in September made the system available to all users.

Mr Martin said that if this worked as intended, 'it should go a long way towards eliminating many of the frustrations encountered by practitioners.

'The scanning problems will not be relevant, and completion of forms on-line should be less complex than the current arrangements.'

But whatever problems may arise, there is no escaping the computer's onward march into the heart of solicitor's offices. Mr Cameron predicts: 'E-delivery is going to be flavour of the year by 2007.

'I expect there will be e-lodgement at the Land Registry, of SDLT and of suspicion reports under money laundering legislation. Solicitors have got to get ready for it.'

Mark Smulian is a freelance journalist