This article is from the source 'bbc' and was first published or seen on . The next check for changes will be
You can find the current article at its original source at https://www.bbc.com/news/articles/c62n366q306o
The article has changed 8 times. There is an RSS feed of changes available.
| Version 6 | Version 7 |
|---|---|
| What we do and don't know about Angela Rayner's tax affairs | What we do and don't know about Angela Rayner's tax affairs |
| (about 11 hours later) | |
| Mystery continues to swirl around the expert advice Angela Rayner said she received before buying a flat in East Sussex. | Mystery continues to swirl around the expert advice Angela Rayner said she received before buying a flat in East Sussex. |
| Rayner, who is also the minister in charge of housing, has admitted she underpaid stamp duty on her £800,000 flat in Hove. | Rayner, who is also the minister in charge of housing, has admitted she underpaid stamp duty on her £800,000 flat in Hove. |
| She claimed she was badly advised, with allies suggesting she'd received advice on the sum owed from three people – a conveyancer and two experts on trust law. | She claimed she was badly advised, with allies suggesting she'd received advice on the sum owed from three people – a conveyancer and two experts on trust law. |
| However, the conveyancing firm, Verrico & Associates, has now said it did not give her tax advice. | However, the conveyancing firm, Verrico & Associates, has now said it did not give her tax advice. |
| In a statement, the company's founder Joanna Verrico, said the company "does not deal with Trusts or offer tax advice" and that it calculated the stamp duty owed in good faith "based on the facts and information provided to us". | In a statement, the company's founder Joanna Verrico, said the company "does not deal with Trusts or offer tax advice" and that it calculated the stamp duty owed in good faith "based on the facts and information provided to us". |
| What we know | What we know |
| At a core of the tax scandal are questions for Rayner about whether she sought the right specialist tax advice when buying the three-bed Hove property. | At a core of the tax scandal are questions for Rayner about whether she sought the right specialist tax advice when buying the three-bed Hove property. |
| When she bought the flat, she declared that it was the only property she owned, meaning £30,000 of stamp duty was paid, rather than the £70,000 due if it is a second home. | When she bought the flat, she declared that it was the only property she owned, meaning £30,000 of stamp duty was paid, rather than the £70,000 due if it is a second home. |
| She claimed it was the only home she owned because she had previously given up her stake in the family home in her constituency in Ashton-under-Lyne, Greater Manchester. | She claimed it was the only home she owned because she had previously given up her stake in the family home in her constituency in Ashton-under-Lyne, Greater Manchester. |
| But her situation was complicated because she had transferred that stake into a trust set up to benefit her disabled son. | But her situation was complicated because she had transferred that stake into a trust set up to benefit her disabled son. |
| The trust was set up in 2020 under the instructions of a court to manage a payout for a medical incident which had left her and her then-husband Mark's son with life-long disabilities. | The trust was set up in 2020 under the instructions of a court to manage a payout for a medical incident which had left her and her then-husband Mark's son with life-long disabilities. |
| She split from Mark and in 2023, when their divorce was finalised, the pair elected to place part of their stakes in the home into their son's trust, for which they are among the trustees. | She split from Mark and in 2023, when their divorce was finalised, the pair elected to place part of their stakes in the home into their son's trust, for which they are among the trustees. |
| This was to enable a "nesting" arrangement, meaning the children could remain in the family home while the parents alternated living there. | This was to enable a "nesting" arrangement, meaning the children could remain in the family home while the parents alternated living there. |
| Earlier this year she sold her remaining 25% in the home to another trust set up for her son's benefit and received £162,500 which she put towards her purchase in Hove. | Earlier this year she sold her remaining 25% in the home to another trust set up for her son's benefit and received £162,500 which she put towards her purchase in Hove. |
| Rayner said that when she bought the East Sussex flat, "my understanding, on advice from lawyers, was that my circumstances meant I was liable for the standard rate of stamp duty". | Rayner said that when she bought the East Sussex flat, "my understanding, on advice from lawyers, was that my circumstances meant I was liable for the standard rate of stamp duty". |
| This was because she had no financial stake in the Ashton home, even though her children remained there and she considered it her main residence. She also spends time at a government-provided flat in Admiralty Arch, central London. | This was because she had no financial stake in the Ashton home, even though her children remained there and she considered it her main residence. She also spends time at a government-provided flat in Admiralty Arch, central London. |
| However, this legal advice was wrong. This is because under tax law, if a property has been placed into trust for the benefit of children under 18, the parents of those children are deemed to be owners of the home for stamp duty purposes. | However, this legal advice was wrong. This is because under tax law, if a property has been placed into trust for the benefit of children under 18, the parents of those children are deemed to be owners of the home for stamp duty purposes. |
| "If you have a trust in favour of your children, then it's treated as your property," said Dan Neidle, founder of Tax Policy Associates and a member of the Labour Party. | "If you have a trust in favour of your children, then it's treated as your property," said Dan Neidle, founder of Tax Policy Associates and a member of the Labour Party. |
| "We're talking about a deeming rule which deems a person, in this case Angela, to own a property in the stamp duty world…in circumstances [where] she doesn't own it at all in the real world," said Sean Randall, an independent stamp duty expert. | "We're talking about a deeming rule which deems a person, in this case Angela, to own a property in the stamp duty world…in circumstances [where] she doesn't own it at all in the real world," said Sean Randall, an independent stamp duty expert. |
| Unanswered questions | Unanswered questions |
| Although we know who the conveyencer was, Rayner's team have refused to answer questions about who the two trust experts she consulted on her Hove purchase were. | Although we know who the conveyencer was, Rayner's team have refused to answer questions about who the two trust experts she consulted on her Hove purchase were. |
| That means we don't know whether the trust experts also have specialised knowledge of tax law, particularly around stamp duty. | That means we don't know whether the trust experts also have specialised knowledge of tax law, particularly around stamp duty. |
| That is likely to be at the centre of ethics adviser Sir Laurie Magnus's assessment of whether she sought appropriate advice. | That is likely to be at the centre of ethics adviser Sir Laurie Magnus's assessment of whether she sought appropriate advice. |
| We also don't know what level of information about the trust they had. | We also don't know what level of information about the trust they had. |
| However, we do know that Rayner elected not to use at least two large law firms who had previously been involved in her son's trust. | However, we do know that Rayner elected not to use at least two large law firms who had previously been involved in her son's trust. |
| The trust was set up in 2020 using law firm, Shoosmiths and a lawyer at the company was one of the trustees. | The trust was set up in 2020 using law firm, Shoosmiths and a lawyer at the company was one of the trustees. |
| That lawyer, who is still a trustee, moved to Rothley Law in July 2023 as a result of an acquisition. | That lawyer, who is still a trustee, moved to Rothley Law in July 2023 as a result of an acquisition. |
| Shoosmiths have said they did not act for Rayner on her flat purchase or advise on stamp duty and that she was "not a current client of the firm and has not been for some time". | Shoosmiths have said they did not act for Rayner on her flat purchase or advise on stamp duty and that she was "not a current client of the firm and has not been for some time". |
| Rothley Law have not responded to a request for comment. | Rothley Law have not responded to a request for comment. |
| Earlier this year, Rayner sold her remaining 25% stake in the house to a trust previously set up for her son's benefit. She received £162,500 which she put towards the purchase of the Hove flat. | Earlier this year, Rayner sold her remaining 25% stake in the house to a trust previously set up for her son's benefit. She received £162,500 which she put towards the purchase of the Hove flat. |
| She used a large regional firm, Midlands-based mfg Solicitors, for that transaction. But she didn't use their services for the purchase of the Hove property, nor did they provide any tax-based advice on that transaction, the company told BBC News. | She used a large regional firm, Midlands-based mfg Solicitors, for that transaction. But she didn't use their services for the purchase of the Hove property, nor did they provide any tax-based advice on that transaction, the company told BBC News. |
| Tax experts have questioned why she elected not to use a large law firm familiar with the complexities of trusts and tax law to act for her in the purchase of the Hove property. | Tax experts have questioned why she elected not to use a large law firm familiar with the complexities of trusts and tax law to act for her in the purchase of the Hove property. |
| Instead, she used as small family-run conveyancing firm based in the seaside town of Herne Bay in Kent. | Instead, she used as small family-run conveyancing firm based in the seaside town of Herne Bay in Kent. |
| That company, Verrico & Associates, employs two licensed conveyancers and four other staff and does not offer tax advice. The name of the company, which appears on a Land Registry document, was first reported by The Guardian. | That company, Verrico & Associates, employs two licensed conveyancers and four other staff and does not offer tax advice. The name of the company, which appears on a Land Registry document, was first reported by The Guardian. |
| HMRC investigation | HMRC investigation |
| Having admitted she underpaid stamp duty, Rayner must pay a £40,000 bill, plus interest, to the taxman. | Having admitted she underpaid stamp duty, Rayner must pay a £40,000 bill, plus interest, to the taxman. |
| She is also at risk from the tax authorities who will now investigate whether she has been "careless" with her tax affairs. | |
| Any penalty for Rayner, which is typically 20% or 30% of the underpaid tax, could hinge on whether she took appropriate legal advice. | Any penalty for Rayner, which is typically 20% or 30% of the underpaid tax, could hinge on whether she took appropriate legal advice. |
| "Someone has made a big mistake," said Sean Randall, an independent stamp duty expert, adding that whether the mistake was by her professional advisors or Rayner herself, she was at "significant risk" of a penalty because blaming an adviser may not be a sufficient defence. | "Someone has made a big mistake," said Sean Randall, an independent stamp duty expert, adding that whether the mistake was by her professional advisors or Rayner herself, she was at "significant risk" of a penalty because blaming an adviser may not be a sufficient defence. |
| "She might say 'I relied on my tax advisers to advise me correctly'. And I definitely sympathise with that [but] usually simply relying on your adviser is not a defence for a penalty of carelessness," Randall added. | "She might say 'I relied on my tax advisers to advise me correctly'. And I definitely sympathise with that [but] usually simply relying on your adviser is not a defence for a penalty of carelessness," Randall added. |
| "If you're buying property and you have complicated affairs involving a trust, you need to speak to a tax adviser and tell them about the trust," Neidle said. | "If you're buying property and you have complicated affairs involving a trust, you need to speak to a tax adviser and tell them about the trust," Neidle said. |
| "If she did that and they got it wrong, [it is] not her fault. But if she didn't go to a specialist or didn't tell them about the trust, I think it was her fault," he added. | "If she did that and they got it wrong, [it is] not her fault. But if she didn't go to a specialist or didn't tell them about the trust, I think it was her fault," he added. |
| "I think a normal person with any sophistication would realise they should mention the trust when getting advice about something else. And a deputy prime minister who's already got into a previous tax scrape involving properties, surely should have a go." | "I think a normal person with any sophistication would realise they should mention the trust when getting advice about something else. And a deputy prime minister who's already got into a previous tax scrape involving properties, surely should have a go." |
| He said this would also affect how HMRC levied penalties on the underpaid tax. | He said this would also affect how HMRC levied penalties on the underpaid tax. |
| James Quarmby, head of private wealth at Stephenson Harwood, said he believed there was a "high" risk of Rayner being fined and that tax officials would want to see the advice she relied on and details of the instructions she had given her lawyer. | James Quarmby, head of private wealth at Stephenson Harwood, said he believed there was a "high" risk of Rayner being fined and that tax officials would want to see the advice she relied on and details of the instructions she had given her lawyer. |
| "Relying on advice is not a complete defence - it must be reasonable to do so in the circumstances and that advice cannot be 'obviously wrong'," he said. | "Relying on advice is not a complete defence - it must be reasonable to do so in the circumstances and that advice cannot be 'obviously wrong'," he said. |
| "Someone in the Revenue now with the whole glare of the UK's media on them is going to make a decision as to whether Rayner was careless," he said. | "Someone in the Revenue now with the whole glare of the UK's media on them is going to make a decision as to whether Rayner was careless," he said. |
| Rayner has previously been critical of tax avoidance and also called former Conservative chancellor Nadhim Zahawi's position "untenable" when details emerged that he was in dispute with HMRC over his tax affairs. | Rayner has previously been critical of tax avoidance and also called former Conservative chancellor Nadhim Zahawi's position "untenable" when details emerged that he was in dispute with HMRC over his tax affairs. |
| Zahawi, who was forced to resign as Tory party chairman for failing to declare that he paid a settlement to HMRC, ended up paying £5m to settle the dispute - a sum which included a 30% penalty for being "careless". | Zahawi, who was forced to resign as Tory party chairman for failing to declare that he paid a settlement to HMRC, ended up paying £5m to settle the dispute - a sum which included a 30% penalty for being "careless". |
| A similar verdict on Rayner's conduct from Sir Laurie Magnus, the independent ethics adviser, on Friday is likely to be politically fatal. | A similar verdict on Rayner's conduct from Sir Laurie Magnus, the independent ethics adviser, on Friday is likely to be politically fatal. |