LISA rules change

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82091696#Comment_82091696

Not sure it would be in OP's interests to draw HMRC's attention to this but agree that, having taken the matter up with solicitor and ombudsman, there isn't really anywhere else to turn - personally if I was in OP's shoes I'd now just let sleeping dogs lie and deal with any follow-up only if/when necessary!

se2020

Although various sources (like the moneybox link above) say it must not be used for solicitors fees the actual rules for the LISA say the funds must be used

"in connection with the acquisition of a legal interest in"

The ombudsman interpretation of rules is "as the average reasonable person would understand them" and it would seem reasonable to me that you could use the funds to cover the necessary conveyancing fees.

As the lisa rules state only the conveyancer can withdraw the funds, the involvement of a conveyancer is not an optional part of the purchase therfore I would suggest the rules would allow Lisa funds to be used to cover this as it is clearly "in connection" with purchasing a first home.

Additionally, although the lisa technical convancing guide does state the amount withdrawn from the lisa must be lower than the purchase price it does not state it that the total funds of lisa & mortgage (& any cash from the buyer) must be lower than the purchase price so it would seem both lisa and lender rules could still be satisfied in the event of a surplus of funds.

It would seem that the solicitor and the ombudsman have come to the same conclusion.

Note that the ombudsman is basically a dispute resolution service and a decision made by them won't actually help if hmrc decide it is wrong.

However, as previously mentioned, the full responsibility of drawing and allocation of Lisa funds is placed upon the convancing solicitor.

In addition, the solicitor is also acting for the interests of the mortgage company so you are covered there as well.

The individual buyer is not a professional and is not expected to know the complicated rules of either the lisa, or the mortgage provider. Therfore, as long as the buyer has answered all the forms truthfully, they have nothing to worry about if mistakes have been made. Ie, hmrc will be going after your solicitor not yourself as, although the lisa and property are in your name, it is the solicitor who is responsible for correct allocation of the funds.

It is unclear how/why the ombudsman has become involved in this. Generally they will only help if you have (wrongly) suffered a financial loss and I cannot see any situation here which could possibly have left you worst off financially?

The ombudsman would also need to see that the solicitor had acted incorrectly. As they have withdrawn the full balance of the lisa I would presume that was precisely what you instructed them to do? (Rather than a set figure). Potentially you would have a claim if you instructed them to withdraw £20,225 and that was the full balance of the account at the time of the instruction. If they then applied to withdraw the full balance at a later date (when the balance was higher) rather than the amount provided that would be reason for a complaint although, again, you would have to show how it had cost you money and provide an actual £ number to the ombudsman.

In certain circumstances you can open a new claim with the ombudsman on the same issue although it needs to be on reasonably different grounds. If you provide some more details of why you have a problem with the way things have been done someone may be able to offer some help with that.

For example, if you planned to use a 12mth 0% credit card to pay the solicitors bill you could potentially claim the loss of interest over 12mths of the lisa (potentially even longer) minus any card charges.

On the other hand, the issues need to be direct.

So if you were not planning to pay the solicitors bill at all becausethey were really slow or something and are now unhappy as they have taken the lisa money for that rather than returning it to your lisa account you probably won't get far.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82092073#Comment_82092073

Where are you locating that reference to 'connection', in terms of whether it could/should be interpreted as taking precedence over the clear wording in both the legislation ("the withdrawal must only be used by the account investor towards defraying the purchase price") and gov.uk guidance quoted earlier?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82091731#Comment_82091731

personally if I was in OP's shoes I'd now just let sleeping dogs lie 

That would also be my Advice !

In any case if you just phoned HMRC, I am pretty sure whoever answered the phone would have no idea what the answer was .

masonic

https://forums.moneysavingexpert.com/discussion/comment/82092073#Comment_82092073

The Legal Ombudsman provides an alternative dispute resolution service where the individual has already formally complained to the firm and is dissatisfied with their final response. It would be part of the LO's remit to consider any complaint related to standards of service, including non-financial detriment and emotional impact.

Based on the discussion so far, it seems the OP is merely concerned that the solicitor has acted improperly in administering the LISA funds and wished for the money they've identified as a surplus to be returned to the LISA, in line with their understanding of the rules, in order to avoid any future stress and inconvenience should HMRC open an enquiry. I don't think there is any suggestion they would be unhappy if it could be demonstrated unequivocally that the right process was followed.