Ms Rayner’s stamp duty bill was due on the £800,000 Brighton seaside flat that she bought last year, having sold her final stake in the family home in her constituency near Manchester to a trust established for the benefit of her son.
She believed that because she did not own any property when she bought a new flat with a mortgage, she could pay the standard rate of stamp duty – a property levy paid on residential house sales – which would have come to £30,000.
In fact, Ms Rayner owed a total stamp duty bill of £70,000 because of the surcharge imposed on second homes.
She had previously sold her stake in her family home to a court-ordered trust set up to manage compensation paid to her disabled son after a traumatic birth. She believed this meant that her Brighton flat was not a second home.
But this assumption transpired to be wrong.
This was because of rules designed to stop parents putting their family homes “in trust” for their children to avoid the second home stamp duty surcharge.
An exemption introduced by the former Conservative government in 2017 means that parents with exceptionally disabled children do not have to pay the extra tax. But this is limited to cases where deputyship orders – a court order for those who do not have mental capacity – are in place.
The Telegraph understands that no such order was in place for Ms Rayner’s son.
However, Ms Rayner’s lawyers claim that ministers intended the exemption to be broader than the legislation actually allows. It is understood that Ms Rayner was advised that she might not have to pay the additional bill at all.
Andrew Marr, from Forbes Dawson, said that triggering a technical debate over the case not being clear-cut would probably be “helpful to her in defending against carelessness”.
Before deciding that the second-home stamp duty surcharge was not payable, Ms Rayner sought advice from two separate sources, an investigation by Sir Laurie found in September.
Advice ‘ignored’
He found that she was recommended to seek more specialist help from expert tax lawyers, but she did not heed this advice.
Sir Laurie found that she had twice been informed in writing that the standard rate of stamp duty would apply. But in both instances, “that advice was qualified by the acknowledgement that it did not constitute expert tax advice and was accompanied by a suggestion, or in one case a recommendation, that specific tax advice be obtained”.
But sources close to Ms Rayner said that this report had not taken into account that she had been given definitive advice that she would not owe the second home surcharge. This point is crucial to HMRC’s decision not to charge the “carelessness” penalty. But Ms Rayner’s team has not published the advice.
In September, the firm which handled her purchase of the flat in Hove said they had not advised Ms Rayner on her tax position.
“We did not and never have given tax or trust advice,” Joanna Verrico, the managing director of Verrico & Associates, told The Telegraph. “It’s something we always refer our clients to an accountant or tax expert for.”
The tax authorities decided that Ms Rayner had not acted with impropriety or carelessness and there was therefore “no chargeable penalty” levied by the taxman.
Tax advisers told The Telegraph that when they had handled similar cases, penalties had been applied.
Rowan Morrow-McDade, tax director at accountancy firm Alexander & Co, said he was “shocked” by HMRC’s decision.
He said that when his clients were handed penalties, and he managed to negotiate it down to zero, “it’s because they’ve gone to a tax adviser and the tax advisor has given them the wrong information”.
Stamp duty is due within 14 days of the purchase, and interest accrues at HMRC’s penalty rate, which is currently 7.75 per cent.
Mr Morrow-McDade said: “The fact that she never even engaged a tax adviser in the first place, despite being told by two sets of lawyers to do so, it seems bizarre to me that you wouldn’t then say this is a careless error. Ignorance of the law is not a reasonable excuse.”
‘Lucky’ to avoid penalty charge
Another tax adviser told The Telegraph that Ms Rayner had been “lucky” to avoid penalties.
The practitioner said that in complex cases such as Ms Rayner’s: “My normal experience is that … someone not taking tax advice, especially when they’ve had a suggestion to take tax advice from another professional, would almost certainly be regarded as careless.”
He added: “I’ve seen cases where someone has taken advice, but has taken it from the wrong professional, someone who wasn’t qualified to give that advice, and the taxpayer was found to be careless. They were careless in their choice of adviser to rely on.
“If I was defending someone in this scenario to HMRC, I would be thinking I was very lucky to have got away with reasonable care.”
HMRC stated it did not comment on individual cases.
A spokesman for Ms Rayner said: “Following a very detailed consideration of Angela Rayner’s conduct, including the advice sought, HMRC have concluded that she had not acted with any impropriety or carelessness and that accordingly no penalty is chargeable.”
