The mystery
Flabbergasting
Tax advisers were puzzled last week, not to say flabbergasted, at Angela Rayner’s announcement that HMRC had decided not to impose any penalties on her in respect of her having made an incorrect SDLT return in relation to her purchase (the ‘Hove Acquisition) of a flat in Hove (the ‘Hove Flat’) and, as a result, having underpaid the SDLT to which she was chargeable by £40,000. Has HMRC been careless in not penalising Mrs Rayner for carelessness?
The decision of the Independent Adviser on Ministerial Standards
HMRC’s decision was in spite of the fact that the Independent Adviser on Ministerial Standards, Sir Laurie Magnus, in finding that Mrs Rayner had breached the Ministerial Code, had found that:
‘b) [although] on the basis of the advice she received, Ms [Sic] Rayner believed that the lower rate of SDLT would be applicable; indeed she was twice informed in writing that this was the case; …
c) …, 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; and
d) if such expert tax advice had been received, as it later was, it would likely [sic] have advised her that a higher rate of SDLT was payable.
…
It is highly unfortunate …, that Ms Rayner failed to pay the correct rate of SDLT on this purchase, particularly given her status and responsibilities as the Secretary of State for Housing, Communities and Local Government and as Deputy Prime Minister. She believed that she relied on the legal advice she had received, but unfortunately did not heed the caution contained within it, which acknowledged that it did not constitute expert tax advice and which suggested that expert advice be sought.’
A little light
Information which has emerged since Mrs Rayner’s announcement has cast some light on this rather murky matter but many questions remain. We have no doubt that there are further revelations to come and that the matter will continue to trouble the headlines.
Shortly after Mrs Rayner made her announcement, Dan Neidle, a solicitor and distinguished tax specialist, was quoted in the press as saying that HMRC’s decision was ‘unexplained’ and left him ‘mystified’. Mr Neidle is the founder of Tax Policy Associates Limited which describes itself as ‘the independent tax and legal policy think tank’. Mr Neidle admits to being a member of the Labour Party and he served on the Party’s National Constituency Committee until 2025. If even Mr Neidle was mystified by HMRC’s decision not to charge penalties in respect of Mrs Rayner’s failure to make a correct return then clearly there was a mystery to be solved.
Mrs Rayner’s previous acceptance that her return was incorrect
After Mrs Rayner had been caught out in her sins of omission by the Telegraph, she said, in a statement which was published verbatim in the Guardian on 3rd September 2025:
‘ …, given the recent allegations in the press I have subsequently sought further advice from a leading tax counsel to review that position and to ensure I am fully compliant with all tax provisions. I have now been advised that although I did not own any other property at the time of the purchase, the application of complex deeming provisions which relate to my son’s trust gives rise to additional stamp duty liabilities. I acknowledge that due to my reliance on advice from lawyers which did not properly take account of these provisions, I did not pay the appropriate stamp duty at the time of the purchase. I am working with expert lawyers and with HMRC to resolve the matter and pay what is due.
…
I deeply regret the error that has been made.’
Verrico Associates defends itself
The Guardian reported on 5th September 2025, however, that the head of the firm Verrico Associates Ltd, which was not a firm of solicitors but of licensed conveyancers, which acted as Mrs Rayner’s conveyancers on the Hove Acquisition had said in response that:
‘It did not offer … [Mrs Rayner] … tax advice and completed her stamp duty return based only on information she provided.
Joanna Verrico, the head of a small, family-run firm in Kent, said on Thursday it had not provided any advice to the deputy prime minister on how much stamp duty to pay.’
The article went on to quote Mrs Verrico as saying:
‘ “I confirm my firm does not deal with trusts or offer tax advice. The stamp duty land tax was calculated using the HMRC calculator and was strictly based on the facts and information provided to us.” ’
Mrs Rayner’s expression of regret for not taking appropriate advice
When Sir Laurie Magnus’ decision made it necessary for Mrs Rayner to resign, she said in her resignation letter to the Prime Minister:
‘I deeply regret my decision to not seek [sic] additional specialist tax advice given both my position as housing secretary and my complex family arrangements. I take full responsibility for this error.’
So, on the basis of Sir Laurie’s report of his decision, the comments of Verrico Associates Ltd and her own resignation statement, it appears that Mrs Rayner made an incorrect return because she ignored advice that expert tax advice was required. In such circumstances HMRC will normally, at the least, impose penalties for carelessness and it will often allege that the error is deliberate.
Opinion shopping
It appears that the ‘leading Tax Counsel’ to whom Mrs Rayner referred in her September 2025 statement was the well-respected KC, Jonathan Peacock. At that time Mrs Rayner accepted, on the basis of his advice, that she had made an incorrect return and had underpaid SDLT. It appears, however, that Mrs Rayner did a little bit of opinion shopping for the Telegraph reported on 14th May 2026 that:
‘In January, she ditched her existing legal team and hired Graham Aaronson KC, a leading tax barrister [as, indeed, is Mr Peacock], who told her she could challenge the extra £40,000 tax bill in court with a “realistic chance of success”. Ms Rayner decided to pay up rather than launch court proceedings that could take years and scupper a political comeback.’
What prompted Mrs Rayner to appoint Mr Aaronson and abandon Mr Peacock is another minor mystery of the affair. What is apparent, however, is how lucky Mrs Rayner is that she can pay £40,000 to HMRC, considering the payment not to be due under the law and, therefore, to be a gift, simply in order to benefit her political career. This in addition to paying the, no doubt, very substantial fees of Mr Peacock, for the advice which she did not like, and of Mr Aaronson.
Mrs Rayner changes her tune
The statement she released after Mr Aaronson had persuaded HMRC not to impose a penalty on her gave a very different account of how she had come to make an inaccurate return and failed to pay £40,000 of tax. That was not, as her resignation letter had suggested, due to her ‘decision to not seek [sic] additional specialist tax advice’. Not at all. She now considers that she:
‘ … took reasonable care and acted in good faith, based on the expert advice I received …’.
Here is her statement:
‘I welcome HMRC’s conclusion, which has cleared me of any wrongdoing.
I have been exonerated by HMRC of the accusation that I deliberately sought to avoid tax.
When purchasing a home of my own with a mortgage, I did not own any other property and had no personal financial interest in the court-instructed trust set up to manage my son’s financial award. I was advised by experts that I should pay stamp duty at the standard rate.
I set out to pay the correct amount of tax. I took reasonable care and acted in good faith, based on the expert advice I received, and HMRC has accepted this.
I have always sought to act with integrity, and I believe politicians should be held to high standards – that is why I resigned from Government and co-operated fully with HMRC.
I wanted to ensure that I paid every penny that I owed, and have done so. I am relieved that my family can now move on – and that I can get on with my job.’
How is her present statement that her incorrect return was based on expert tax advice to be reconciled with Sir Laurie’s finding that she ‘did not heed the caution contained within … [the advice she had received] … which acknowledged that it did not constitute expert tax advice and which suggested that expert advice be sought;’? How is it to be reconciled with her previous deep regret at her ‘decision to not seek [sic] additional specialist tax advice’?
Why did Mr Aaronson consider that no penalty for carelessness was exigible?
Mrs Rayner, he asserts, did take, and follow, proper advice
Mr Neidle has now gone a little way towards clearing some part of the fog. A posting on the Tax Policy Associates’ website reveals that Mr Neidle has spoken to Mr Aaronson and summarises what Mr Aaronson said as follows:
‘the publicly stated facts were incomplete and (although he is not that blunt) Sir Laurie Magnus got it wrong. Mr Aaronson says that, properly understood, the legal advice Ms Rayner received was sufficient to show she had taken reasonable care. If that account is right, HMRC’s decision becomes easier to understand.’
As Mr Neidle, however, goes on to comment:
But Mr Aaronson was acting for Ms [sic] Rayner, spoke to us with her permission, and Ms Rayner’s team is not releasing the documents which would let us verify his account. So we have to treat his explanation as one side’s position, not an established fact.’
How could others not see what Mr Aaronson saw?
Mr Aaronson’s statement is all very well but what constitutes advice and what is the content of that advice is not a technical legal question and it is one which there is no reason to think that Sir Laurie Magnus could not have determined accurately. It is also unlikely that, when Mr Peacock considered the matter, he would not also have considered the question of whether penalties would be exigible to which the nature of the advice given to Mrs Rayner before she made her return was crucial. How could they not have seen what Mr Aaronson saw?
Accounting for HMRC’s accommodating behaviour
Many advisers who commented on the matter at the time that Mrs Rayner announced HMRC’s decision were surprised that HMRC had been willing to concede, after a mere nine months of enquiry, that the inaccuracy in Mrs Rayner’s return had not been made either deliberately or carelessly when HMRC’s normal practice is to move far more slowly and to argue tenaciously that penalties are exigible.
In our Blog Point of 27th January 2023 (Mr Zahawi’s Travails) we gave an example of HMRC’s normal approach:
‘…, HMRC often alleges in the course of investigations that taxpayers’ errors are deliberate when they are clearly neither deliberate nor careless. A client came to us a few years ago who had adopted in his returns an incorrect treatment of certain types of income in respect of which the relevant legislation was particularly obscure having been advised on the matter by no less than three highly respectable firms of solicitors. He placed a high value on his well-deserved reputation for honesty and financial probity. When he became aware of his omissions he made, with our advice, a complete and substantial disclosure to HMRC. HMRC’s response was to allege that his error was deliberate despite the weight of evidence demonstrating that it was not even careless. Two years later, after the investment of an enormous amount of his time, having incurred substantial professional fees and after a review under TMA 1970 s49A HMRC concluded that our client’s errors were indeed neither deliberate nor careless, that no penalties were exigible and that some of its assessments must be vacated because, the errors being neither deliberate nor careless, the assessments were out of time.’
Mr Aaronson is very persuasive but it is difficult to believe that even his persuasiveness is sufficient to account entirely for HMRC’s accommodating treatment of Mrs Rayner.
How Mrs Rayner could resolve the mystery
Of course, it would be easy for Mr Rayner to resolve the mystery by simply disclosing all of the correspondence, and notes of meetings, between her, her advisers and HMRC concerning the matter, including all the advice she has received. It does not seem, however, that she is willing to do so.
Why did Mr Aaronson consider that Mrs Rayner’s return was correct in the first place?
A further mystery is how Mr Aaronson concluded, contrary to the opinion of every other tax specialist of whose opinion on the matter we are aware, that Mrs Rayner, ‘could challenge the extra £40,000 tax bill in court with a “realistic chance of success”’.
A radically broad purposive construction
Here again Mr Neidle is able to clear some of the fog. He explains:
‘We have reviewed a paper prepared by Mr Aaronson (unfortunately we are not able to publish it) [of course, it could be published if Mr Aaronson and Mrs Rayner gave their permission]. The argument is that paragraph 12 of Schedule 4ZA should be read more broadly than its actual words, so as to cover any court-ordered trust for any disabled child – not just trusts under the Mental Capacity Act 2005 for children who lack mental capacity.
It’s important to say at the start that this is not relevant to the careless penalty point. The question is not whether a clever argument could later be constructed; it’s what care Ms Rayner took at the time the SDLT return was filed.[actually, of course, if Mrs Rayner’s return was not incorrect she could not be subjected to a penalty for carelessly making an incorrect return]
In our view, the argument is well beyond anything the existing caselaw on Pepper v Hart and Inco Europe would support. It is the kind of argument an advocate can in good faith run on instructions, but in our view it is not – with respect – the “better view” of the law. The better view is the one taken by Ms [sic] Rayner’s first KC and by HMRC.’
Mr Neidle then goes on to give his reasoning for this conclusion which we find entirely convincing.
Mr Aaronson’s belief
Mr Neidle concludes his analysis by stating his belief that:
‘…Mr Aaronson broadly shares the views expressed above. He nevertheless believes that, if he argued the point before the Supreme Court, a majority of the Court would extend the existing interpretative doctrines and find in Ms Rayner’s favour. We do not agree.’
Having looked at the matter ourselves, we consider Mr Neidle’s conclusion to be clearly correct.
Serious questions about Mrs Rayner’s fiscal affairs have not been put to rest
So, Mrs Rayner’s tax affairs continue to raise serious questions about her own behaviour and the impartiality of HMRC. These are questions which it is likely could be answered if she released all the correspondence, and meeting notes which are relevant to the matter. Of course, she does not have to do so but informed members of the public will suspect that, if she does not, she has good reason to keep this information hidden.
