Angela Rayner’s recent resignation as Deputy Prime Minister and Housing Secretary has brought renewed scrutiny to a stamp duty controversy involving her property purchase. Despite admitting to underpaying stamp duty on a flat in Hove, East Sussex, Ms Rayner has reportedly avoided a financial penalty, prompting questions from tax and property experts about the handling of her case by HM Revenue & Customs (HMRC).

Background to the Stamp Duty Dispute

The controversy centres on Ms Rayner’s purchase of an £800,000 seaside flat in Hove, where she declared the property as her primary residence. This declaration allowed her to pay £30,000 in stamp duty rather than the £70,000 that would have been due if the flat was considered a second home. The Times reported that Ms Rayner had removed her name from the deeds of her Greater Manchester home weeks before buying the Hove flat, a move that facilitated the lower stamp duty payment.

Following public and media attention, Ms Rayner admitted to underpaying stamp duty by approximately £40,000. She has since paid the outstanding amount but insists she was not deliberately avoiding tax and has been “exonerated by HMRC” of any wrongdoing.

HMRC’s Decision and Industry Reaction

HMRC’s conclusion that Ms Rayner’s actions were neither careless nor deliberate has raised eyebrows among tax professionals and conveyancing experts. Sean Drury of Blick Rothenberg told The Times that the error appeared to stem from carelessness, defined as a failure to take reasonable care without intent to mislead. Such errors typically attract penalties ranging from 0 to 30% of the unpaid tax. However, in Ms Rayner’s case, no penalty has been imposed.

Mr Drury highlighted a perceived disparity in how ordinary taxpayers are treated compared to politicians, stating, “We are seeing taxpayers get in touch with HMRC and admit they got it wrong and are automatically being charged penalties.” He added that many individuals would likely have faced fines for lesser errors, and that HMRC’s response times for penalty decisions often span years, contrasting sharply with the swift resolution of Ms Rayner’s case.

Expert Views on the Absence of a Penalty

Independent stamp duty specialist Sean Randall described HMRC’s decision not to fine Ms Rayner as “extraordinary.” He noted that penalties usually apply in cases of deliberate or careless errors, with the latter akin to negligence. Mr Randall pointed out that Ms Rayner had been advised by conveyancing firms to seek specialist tax advice due to the complexity of her circumstances, advice she apparently did not follow.

“I think if you asked 100 people on the street, 99 would say she was careless in failing to heed those warnings,” he said. “But ultimately, it is HMRC which decides. I find it extraordinary she has been found not to have acted carelessly.”

HMRC declined to comment on the case, citing confidentiality laws.

What this means for landlords

This case underscores the importance of seeking specialist advice when purchasing property, especially in situations where residency status affects stamp duty liability. Landlords and agents should be aware that HMRC applies penalties for errors deemed careless or deliberate, and that the general public may face stricter enforcement than high-profile individuals.

Ensuring compliance with stamp duty regulations and maintaining clear documentation can help avoid costly disputes and penalties. The swift resolution of Ms Rayner’s case is unusual and should not be taken as indicative of typical HMRC practice.

Source: Based on reporting from Property118

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