Angela Rayner is under pressure to provide proof of her recent clearance by the tax authorities, as she positions herself to enter the Labour leadership contest. The former deputy leader of Labour revealed that HM Revenue and Customs (HMRC) had exonerated her of any misconduct or negligence regarding her property acquisition in Hove, East Sussex.
Rayner had to pay £40,000 in overdue stamp duty for the coastal flat but reportedly escaped a penalty. This has sparked criticism from experts and political opponents who argue that typical taxpayers would usually face fines in similar situations.
Concerns have been voiced about the reasoning behind HMRC’s decision that Rayner was not negligent, especially since she did not seek expert tax advice for the complicated transaction, which included establishing a trust for her disabled son.
Additionally, the rapid closure of the investigation has raised suspicions. This swift resolution has seemingly cleared the path for Rayner to possibly compete in the anticipated leadership race to replace Sir Keir Starmer.
Questions were raised about how the taxman had concluded she had not been careless, given she did not obtain specialist tax advice on the complex transaction that involved a trust being set up for her disabled son.
Eyebrows were also raised over how the probe came to be closed so quickly, paving the way for her to stand in an expected race to succeed Sir Keir Starmer.
She is understood to have learnt of the decision on Tuesday but waited until yesterday morning, as others began to move against the Prime Minister, to announce it.
Shadow Cabinet Office minister Alex Burghart said: ‘Angela Rayner’s carefully worded statement cannot disguise the fact that she has still had to settle up an unpaid tax bill of £40,000.
‘Only Angela Rayner seems to be able to say that this is now settled with HMRC. She still has serious questions to answer.
Angela Rayner last night faced calls to prove she has been ‘cleared’ by the taxman just in time to join the Labour leadership race
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‘If she wants the top job, she should publish all correspondence with HMRC in full.’
Andrew Marr, managing partner at specialist tax firm Forbes Dawson, said: ‘This situation is certain to irk those less fortunate than Rayner. HMRC is notoriously hardline when it comes to penalties, especially on stamp duty… Whether HMRC has acted fairly in this instance is questionable.’
Dan Neidle of Tax Policy Associates, who had predicted she could face a penalty of £8,000, said the outcome described by Ms Rayner was ‘surprising’.
He told the Daily Mail: ‘For people to have confidence in the system, it would be good to see more openness from her.’
Conservative peer and chartered tax adviser Lord Mackinlay added: ‘I think she has been extremely lucky. It’s very rare that the Revenue does not charge a penalty – the lowest is usually 15 per cent.’
He said her advisers may have asked for a ‘suspension of penalty’ on the grounds that she will not make the error again, and because it related to a complicated area of tax law.
But he added that ‘usually such investigations take a considerable amount of time’, often at least 18 months for stamp duty, yet Ms Rayner’s case was concluded in less than half that time. ‘I would hate to think HMRC plans its affairs for the convenience of the Labour Party,’ he said.
A spokesman for HMRC said: ‘We cannot comment on individuals due to taxpayer confidentiality law.’
Ms Rayner quit the Cabinet in September after she was found to have breached the ministerial code by underpaying stamp duty on the purchase of her £800,000 flat in Hove.
In a complicated arrangement, she bought the property after her son’s trust bought her out of her constituency property, and believed she did not need to pay the higher rate of stamp duty required for a second home.
At the time, the Government’s sleaze watchdog said it was ‘deeply regrettable that the specific tax advice was not sought’.
But Ms Rayner revealed in interviews with The Guardian and ITV that HMRC had cleared her. ‘They’ve said that there wasn’t any wrongdoing and that I didn’t try to avoid paying tax,’ she said.
She admitted the investigation had ‘hurt’, adding: ‘The most distressing thing is that people felt that I was tax-dodging or trying to set up trusts to avoid tax or being careless.’
In a statement on social media, she said: ‘I have been exonerated by HMRC of the accusation that I deliberately sought to avoid tax.’
Her announcement prompted fresh speculation that she will now seek a new role in Downing Street, with two major bookies cutting their odds on her becoming the next PM.
But asked in interviews if she would join in a contest triggered by another contender, she would only say: ‘I’m not going to get into hypotheticals.’
