Angela Rayner stamp duty: why did HMRC charge no penalty?

2026-05-14T09:04:26+00:00

Why did HMRC not charge Angela Rayner a penalty?

UPDATED 5pm: We have now spoken to Graham Aaronson KC, who advised Angela Rayner. He says that HMRC’s decision is explained by facts not apparent from Sir Laurie Magnus’s report. We have reflected his account below. But Ms Rayner’s team is not releasing the underlying documents, and we cannot accept the word of one party to a dispute without evidence.

The Guardian reported this morning that HMRC have “cleared” Angela Rayner over her stamp duty affairs. She has paid the additional £40,000 of stamp duty1 that was due on her Hove flat, but HMRC have decided she was not “careless”, and so no penalty is being charged.

That is a surprising outcome. We said last September that, on the facts as publicly stated, Ms Rayner was almost certainly “careless” within the meaning of Schedule 24 of the Finance Act 2007, and that a penalty of around 20% (about £8,000) was the likely outcome.

Mr Aaronson says 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. But Mr Aaronson was acting for Ms 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.

There is an obvious difficulty here: Ms Rayner has not released the evidence showing why she was not “careless”, and HMRC officials are generally prohibited, on pain of criminal sanction, from disclosing information about individual taxpayers. So we know HMRC’s conclusion, but we do not know the evidential basis for it. This leaves us in the unsatisfactory position of having to assess the case on the basis of two competing accounts: Sir Laurie’s public report, and Mr Aaronson’s account of the underlying documents.

This article therefore asks two questions. First: if Sir Laurie’s report was right, why was there no penalty? Second: if Mr Aaronson’s account is right, why will Ms Rayner not release the documents which explain HMRC’s decision?

We also include a technical note at the end explaining why, in our opinion, the substantive legal argument for appealing the £40,000 was weak.

The full background is in our original article, and mostly comes from the report from Sir Laurie Magnus, the Independent Adviser on Ministerial Standards.

Ms Rayner sold her remaining interest in her Ashton-under-Lyne family home to a trust set up for her disabled son, and bought a flat in Hove.

She paid stamp duty at the standard rate of around £30,000.

Stamp duty is 5% higher if you are buying a second home; Ms Rayner didn’t pay that higher rate.

Her conveyancer and a trusts lawyer had both told her standard rate applied – but both had explicitly said this was not specialist tax advice. One “suggested” she obtain specialist tax advice; the other “recommended” it. However Ms Rayner did not obtain tax advice.

After the story broke in the press, Ms Rayner instructed a tax KC, who advised that the higher rate for additional dwellings did in fact apply, because a “deeming rule” meant that Ms Rayner was deemed to herself own the house that the trust held for her son.

Ms Rayner therefore had to pay an additional £40,000 (and, we expect, about £3,000 of interest).

This summary is, however, now contested.

Mr Aaronson told us today that new facts emerged during his review of Ms Rayner’s papers. He says that, of the two sets of legal advice, one recommended that Ms Rayner obtain specialist tax advice, but only on a separate point unrelated to the SDLT charge. He says that the other gave definitive advice that the standard rate applied, and concluded that Ms Rayner did not need to take any further action.

Mr Aaronson was careful not to criticise Sir Laurie for reaching a different conclusion: Sir Laurie had two days, and Mr Aaronson had many months. But the two accounts are difficult to reconcile. If there was a “smoking gun” clearing Ms Rayner, then surely her team would have provided it to Sir Laurie? And why did Ms Rayner’s resignation letter say “I deeply regret my decision to not seek additional specialist tax advice”?

Mr Aaronson is an eminent KC with an excellent reputation; however, he was acting for Ms Rayner, and spoke to us with her permission. Ms Rayner’s team is not providing the underlying documentation (we asked; they are not willing to).

We therefore have to treat Mr Aaronson’s account as a serious possibility, not an established fact. Part of Mr Aaronson’s account is reflected in this piece in The Times.

We approached Sir Laurie Magnus’s office: he was not able to provide any comments.

What if Sir Laurie’s report was correct?

Sir Laurie’s report is currently the only independent summary of the facts of this case. We will therefore start by proceeding on the basis that he was correct.

The legal test is whether Ms Rayner failed to take the care a “prudent and reasonable person in her position” would have taken. The leading caselaw is clear that you can rely on professional advice – but, as the First-tier Tribunal said in Lithgow, not where the advice is “hedged about with substantial caveats”. Here, on the basis of Sir Laurie’s conclusions, both advisers told her that they were not tax specialists, and that specialist advice should be obtained. She didn’t obtain it.

It is hard to see how a taxpayer, undertaking a complex transaction involving a court-ordered trust for a disabled child and the purchase of a second property, and twice told to obtain specialist tax advice, can be said to have taken reasonable care by not doing so. That conclusion is even harder where the taxpayer was Deputy Prime Minister and Secretary of State for Housing.

That is exactly the kind of situation in which the caselaw says reliance on the original advice falls away. So neither our usual team, nor the other senior lawyers we have spoken to (including a retired judge), would understand why Ms Rayner was not “careless”.23 We believe Mr Aaronson agrees with this summary of the law – but of course he says the facts are different.

So we remain of the view that, if Sir Laurie was correct that Ms Rayner was advised by two sets of lawyers to obtain specialist tax advice, she was “careless” and penalties are due. Any decision by HMRC to not charge penalties would seem generous.

What if Mr Aaronson’s summary is correct?

If, on the other hand, the facts are as Mr Aaronson says, then HMRC’s conclusion becomes much easier to understand. On Mr Aaronson’s account, Ms Rayner received definitive advice that the standard rate applied. If that account is right, and if the advice was indeed sufficiently clear and unqualified, then the error was not necessarily Ms Rayner’s fault.

Mr Aaronson says that, once he was able to demonstrate the facts to HMRC, they agreed. It appears that this was not a simple case with one “smoking gun”, but a fairly complex chain of correspondence. That would explain why it took some time to reach this point, although that is also a fairly typical timescale for an SDLT enquiry of this nature.

If Mr Aaronson’s summary is correct, then HMRC’s no-penalty decision becomes more understandable. But without the underlying documents, we cannot know whether HMRC was right to accept that account.

Who should we believe?

We cannot accept the word of one side to a dispute, no matter how much we respect their barrister. And HMRC is prohibited from telling us their side of the story.

So unless and until Ms Rayner releases evidence supporting Mr Aaronson’s account, HMRC’s decision remains unexplained. We know the decision; we do not know the evidential basis for it.

We are not suggesting any impropriety on Ms Rayner’s part. There is no evidence she tried to avoid or evade tax.4 –On Sir Laurie’s account, this looked like a careless mistake. On Mr Aaronson’s account, it did not.

The higher-rates-for-additional-dwellings regime is a mess in numerous respects, and this is far from the only time we’ve seen it produce results which appear unfair. Ms Rayner’s case looks like exactly the kind of thing that happens when people with complicated personal arrangements receive advice which turns out to be wrong — or, on Sir Laurie’s account, do not obtain the specialist advice they were told to obtain.

But the “careless” test in Schedule 24 is not about morality, or the fairness of a policy. It asks a narrow, technical question: did the taxpayer take the care that a reasonable person in their position would take?

On the basis of the only independent statement of the facts, from Sir Laurie Magnus, the answer to that question still looks to us like “no”. Mr Aaronson says the underlying documents show a different picture. Without those documents, we and others can’t can’t assess whether HMRC’s acted correctly.

If Ms Rayner wants people to accept that she acted properly, and HMRC’s decision was correct, then she should release the evidence that led HMRC to conclude she was not careless.

Technical note – our view of the substantive legal argument

A leading KC, Jonathan Peacock, originally advised that higher-rate stamp duty was due. However, Ms Rayner subsequently obtained a second opinion from Graham Aaronson KC who concluded that, on the better view, the standard rate was correct after all, and that stamp duty was never actually underpaid – he said there would be a “realistic chance” of successfully appealing HMRC’s decision. Ms Rayner agreed to pay the additional £40,000 anyway, to settle the HMRC enquiry.

We have reviewed a paper prepared by Mr Aaronson (unfortunately we are not able to publish it). 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.

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 Rayner’s first KC and by HMRC.

To get there, the argument has two limbs. First, Pepper v Hart [1993] AC 593: where statutory language is ambiguous, obscure or leads to absurdity, a court may consider statements by the sponsoring minister in Parliament. The sponsoring minister (Mel Stride) said in 2017 that the relief was intended to help “disabled children where a court-appointed trustee buys a home for such a child” – wider than the enacted words. Second, Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586: where Parliament has clearly made a drafting mistake, the courts may rectify the statute by reading in or substituting words, provided the court is “abundantly sure” of (i) the intended purpose, (ii) the inadvertence of the drafter, and (iii) the substance of what Parliament would have enacted. The argument is that paragraph 12(1A) refers to a trust “appointed” by the Court of Protection, which is incoherent (the Court of Protection appoints deputies, not trusts), and that the rational reading is therefore the wider one described by the minister.We think this is well beyond anything the caselaw supports. Pepper v Hart is a famously narrow doctrine which the courts have spent the last thirty years restricting, not expanding – see for example Wilson v First County Trust [2003] UKHL 40 at [56]-[67] and R (O) v Home Secretary [2022] UKSC 3. It does not allow Hansard to extend a relief to a class of taxpayers Parliament did not actually legislate for. We don’t think Mr Stride’s statement can be read as a clear statement that the provision applies to all disabled children – it was one sentence in a summary of Finance Bill clauses, and we see its natural reading as an imprecise statement of the Parliamentary drafting. We therefore don’t think this is a Minister “clearly stating the effect of a provision” within Pepper v Hart, even in its widest formulation. The various explanatory notes are imprecisely drafted, but not clearly contradicted by the text of the legislation.

Inco Europe is narrower still: it permits the correction of obvious drafting slips, not the wholesale rewriting of an exemption to cover a category of disability the statute simply doesn’t address. Paragraph 12(1A) on its face deals with mental incapacity under the MCA 2005.

The argument that paragraph 12(1A) “fails to cover anything” because the Court of Protection doesn’t “appoint” trusts also seems to us to be a stretch. The provision plainly contemplates a trust over property held by a deputy appointed by the Court of Protection. That is a perfectly workable, if inelegantly drafted, category – and HMRC’s own guidance has been applying it on that basis for years. A court would certainly “fix” minor defects to ensure that the provision does in fact apply to MCA cases. However to stretch it to cover all physical and other disabilities would be to make policy.

In our view, that would require the Supreme Court making a significant extension to Pepper v Hart and/or Inco Europe.

We believe 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.5

Our founder, Dan Neidle, is a member of the Labour Party. He was a member of its senior disciplinary body (the National Constitutional Committee) but has stood down. He has no formal role in the Labour Party, advises policymakers in all parties, and is a member of the Scottish Government’s tax advisory group.

The tax in question is stamp duty land tax, the modern tax on land in England. “Stamp duty” is a separate, much older, tax on documents. However we will, in the interests of clarity, refer to the tax as “stamp duty” in this article – our apologies to tax advisers. ↩︎

Note that even if there was an ambiguity in the law, and potential arguments the higher rate did not apply that would not be a defence to “carelessness”, because Ms Rayner was unaware of any ambiguity at the time the stamp duty was paid. ↩︎

Some have suggested that the caveats were not specific to the trust complexities, and were just “boilerplate” which the respective lawyers included in all their advice. It was, therefore, not “careless” to ignore these caveats. Those are apparently not the facts of any party. But even if they were, in our view that would be a wrong reading of the law. It would also create an unfortunate incentive to not obtain specialist SDLT tax advice, given they’d escape penalties if additional SDLT turned out to be due. ↩︎

Cases of anyone being jailed for evading stamp duty land tax are very rare, with extreme facts ↩︎

However (and here we agree with Mr Aaronson) it is a point that would never realistically be tested, because the cost of an appeal to the Supreme Court would greatly exceed the £40,000 at issue. ↩︎

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31 responses to “Why did HMRC not charge Angela Rayner a penalty?”

Mark Amery

May 15, 2026 1:29 pm

As a layman I think finding her non-careless is not only the correct result but obviously so, by the “prudent and reasonable person in her position” you quote. Reasons for this: – On its face this would not seem like a complex transaction to a normal person. It was just a purchase of a flat, for goodness’ sake. Reyner had no particular reason to initially suspect that the tax implications would be deeply complicated and involve “deeming rules” and exceptions within exceptions and span multiple legal specialisms. – Seeking paid advice about the trust *at all* already strikes me as a supererogatory level of care. If you Google for guidance on SDLT you will find government guidance at [got dot uk slash stamp-duty-land-tax] which makes no mention whatsoever of the rule about trusts for minor children, and if you plug Reyner’s circumstances into the calculator linked from that page, it will tell you with no caveats that you do not have to pay the surcharge. One imagines Reyner probably did this at some point. When the government provides you with a tool that you can plug your full circumstances into to calculate your tax liability, you as a “prudent and reasonable person” should surely be able to rely on it without penalty, without having to first pay lawyers to second-guess the government! – Lawyers and similar professionals tend to disavow potential liability at every opportunity. It’s not surprising a trusts lawyer caveated their advice with a warning that they are not a tax advisor. If she had sought advice from a tax advisor, would we not likewise expect them to have caveated any advice with a warning that they are not a trusts lawyer? Was there actually any reasonable way Reyner could have reliably obtained advice without such caveats? Was she meant to assemble some sort of multidisciplinary strike team of different legal professionals to analyse the issue? Can you really expect an ordinary “prudent and reasonable person” to do that for a flat purchase? – Reyner may quite reasonably have doubted if it was even LEGAL to seek further advice on the point, as the details of the trust were subject to a non-disclosure undertaking. We don’t know for sure the wording of that undertaking, but an Armstrong Family Law blog post about Reyner’s case quotes the standard wording usually used and suggests it was probably used in Reyner’s case. It permits an exception when it is “necessary to disclose relevant parts of this order for the purposes of … professional advice”, but what exactly does that standard of necessity mean? If seeking further advice at all was unnecessary does that prevent the disclosure for the purpose of seeking the advice from being necessary? Plausibly it does, and plausibly seeking further advice WOULD have appeared unnecessary on the basis of Reyner’s expectations of what might result from doing so. That is, if you have already received advice on a point from two lawyers, and have no reason at all to expect that a third lawyer’s advice will be any less equivocal, can it truly be “necessary” to seek advice that third time? I think a plausible answer is “no, that would be gratuitous, and therefore a breach of the undertaking”. I certainly would have been deeply unsure about my rights in Reyner’s position. – She was the Deputy Prime Minister, for goodness’ sake! I realise you think this weighs in the direction of demanding HIGHER standards from her; I think surely the exact opposite. It would be madness for her to spend an additional man-day of labour on this matter (which seems like a conservative estimate for selecting and hiring and briefing a further legal professional on the matter) just to maybe secure an extra £40k for the treasury. The amount of time for a reasonable and prudent senior politician to spend on a flat purchase is as little as possible; they’re supposed to be governing the country! It would in my view be a dereliction of her more important duties to spend the amount of time on this that you contend a prudent and reasonable person should’ve spent. Finally, a remark: having sought paid specialist tax advice in the past, my experience was that the “tax advisor” I got seemed to see his role not as neutrally and accurately informing me of the law, but rather as sin-eating – as finding a way to tell me that whatever conclusion would be most favourable to me was the correct one, so I could write it in my tax return without guilt and in the belief that I would have someone to blame if HMRC deemed that I was wrong. (Though I possibly wouldn’t’ve, because, like in Reyner’s case, the advice was caveated with suggestions of other kinds of professionals I could consult if I was in doubt.) Of course Reyner could’ve gone out and sought “specialist tax advice” as was suggested to her… and I suspect she would likewise have found a sin-eater, whether she wanted one or not. And of course they would’ve told her she didn’t owe the higher rate of stamp duty, because that is the sin-eater’s whole job. And then she would have paid the same tax as she did in reality, but apparently have had a far more indisputable case that she had not been “careless” in the eyes of the law by doing so. Would that be in any way a preferable outcome? And if HMRC were to routinely penalise people like Reyner, what exactly would they be incentivising the rest of us to do whenever we find ourselves in doubt about our tax affairs? Is there any good reason at all to think that seeking professional tax advice tends to make an individual’s handling of their tax affairs more accurate, rather than less so, given the incentives?

Dan Neidle

May 15, 2026 1:35 pm

I don’t think that’s right – reasonably clear from the caselaw that if your adviser says obtain tax advice, and you don’t, you’re careless. I don’t think Mr Aaronson would contest this. He just says the facts are different.

As a layman I think finding her non-careless is not only the correct result but obviously so, by the “prudent and reasonable person in her position” you quote. Reasons for this:

– On its face this would not seem like a complex transaction to a normal person. It was just a purchase of a flat, for goodness’ sake. Reyner had no particular reason to initially suspect that the tax implications would be deeply complicated and involve “deeming rules” and exceptions within exceptions and span multiple legal specialisms.

– Seeking paid advice about the trust *at all* already strikes me as a supererogatory level of care. If you Google for guidance on SDLT you will find government guidance at [got dot uk slash stamp-duty-land-tax] which makes no mention whatsoever of the rule about trusts for minor children, and if you plug Reyner’s circumstances into the calculator linked from that page, it will tell you with no caveats that you do not have to pay the surcharge. One imagines Reyner probably did this at some point. When the government provides you with a tool that you can plug your full circumstances into to calculate your tax liability, you as a “prudent and reasonable person” should surely be able to rely on it without penalty, without having to first pay lawyers to second-guess the government!

– Lawyers and similar professionals tend to disavow potential liability at every opportunity. It’s not surprising a trusts lawyer caveated their advice with a warning that they are not a tax advisor. If she had sought advice from a tax advisor, would we not likewise expect them to have caveated any advice with a warning that they are not a trusts lawyer? Was there actually any reasonable way Reyner could have reliably obtained advice without such caveats? Was she meant to assemble some sort of multidisciplinary strike team of different legal professionals to analyse the issue? Can you really expect an ordinary “prudent and reasonable person” to do that for a flat purchase?

– Reyner may quite reasonably have doubted if it was even LEGAL to seek further advice on the point, as the details of the trust were subject to a non-disclosure undertaking. We don’t know for sure the wording of that undertaking, but an Armstrong Family Law blog post about Reyner’s case quotes the standard wording usually used and suggests it was probably used in Reyner’s case. It permits an exception when it is “necessary to disclose relevant parts of this order for the purposes of … professional advice”, but what exactly does that standard of necessity mean? If seeking further advice at all was unnecessary does that prevent the disclosure for the purpose of seeking the advice from being necessary? Plausibly it does, and plausibly seeking further advice WOULD have appeared unnecessary on the basis of Reyner’s expectations of what might result from doing so. That is, if you have already received advice on a point from two lawyers, and have no reason at all to expect that a third lawyer’s advice will be any less equivocal, can it truly be “necessary” to seek advice that third time? I think a plausible answer is “no, that would be gratuitous, and therefore a breach of the undertaking”. I certainly would have been deeply unsure about my rights in Reyner’s position.

– She was the Deputy Prime Minister, for goodness’ sake! I realise you think this weighs in the direction of demanding HIGHER standards from her; I think surely the exact opposite. It would be madness for her to spend an additional man-day of labour on this matter (which seems like a conservative estimate for selecting and hiring and briefing a further legal professional on the matter) just to maybe secure an extra £40k for the treasury. The amount of time for a reasonable and prudent senior politician to spend on a flat purchase is as little as possible; they’re supposed to be governing the country! It would in my view be a dereliction of her more important duties to spend the amount of time on this that you contend a prudent and reasonable person should’ve spent.

Finally, a remark: having sought paid specialist tax advice in the past, my experience was that the “tax advisor” I got seemed to see his role not as neutrally and accurately informing me of the law, but rather as sin-eating – as finding a way to tell me that whatever conclusion would be most favourable to me was the correct one, so I could write it in my tax return without guilt and in the belief that I would have someone to blame if HMRC deemed that I was wrong. (Though I possibly wouldn’t’ve, because, like in Reyner’s case, the advice was caveated with suggestions of other kinds of professionals I could consult if I was in doubt.)

Of course Reyner could’ve gone out and sought “specialist tax advice” as was suggested to her… and I suspect she would likewise have found a sin-eater, whether she wanted one or not. And of course they would’ve told her she didn’t owe the higher rate of stamp duty, because that is the sin-eater’s whole job. And then she would have paid the same tax as she did in reality, but apparently have had a far more indisputable case that she had not been “careless” in the eyes of the law by doing so. Would that be in any way a preferable outcome? And if HMRC were to routinely penalise people like Reyner, what exactly would they be incentivising the rest of us to do whenever we find ourselves in doubt about our tax affairs? Is there any good reason at all to think that seeking professional tax advice tends to make an individual’s handling of their tax affairs more accurate, rather than less so, given the incentives?

Dan Neidle

May 15, 2026 1:35 pm

I don’t think that’s right – reasonably clear from the caselaw that if your adviser says obtain tax advice, and you don’t, you’re careless.

I don’t think Mr Aaronson would contest this. He just says the facts are different.

Adrian

May 15, 2026 10:58 am

I’m not sure I follow why you are saying you have to treat Aaronson’s explanation as one side’s position or that there are only two competing accounts. Surely there are three accounts here: Magnus’s report, Aaronson’s position, and HMRC’s position? Is the issue that you don’t trust HMRC to properly assess the facts and decide whether Rayner was careless?

Dan Neidle

May 15, 2026 12:36 pm

well we know HMRC accepted there wasn’t carelessness but we don’t know why. We don’t know what facts ended up being agreed. It wouldn’t be the first time a brilliant lawyer has achieved a result with HMRC that a neutral party might regard as rather fortunate.

Dan Neidle

May 15, 2026 12:36 pm

Peta Malthouse

May 14, 2026 3:28 pm

I felt at the time that the application of the law to these circumstances is unfair and Parliament should change it. Her conveyancers knew where the money came from due to the money laundering regulations (as must have Farages lawyers for his impoverished fiance’s Clacton House)Their advice could have been stronger It is a measure of her openness and honesty that she accepted it was due and paid up

Richard

May 14, 2026 2:14 pm

Have they actually settled the ‘careless’ penalty point? I may have missed something, but trying to trace everything back, the only definite statement I can find from her is that HMRC have “cleared me of any wrongdoing” and “I have been exonerated by HMRC of the accusation that I deliberately sought to avoid tax”. The second phrase sounds as if HMRC have said that they will not charge a “deliberate” penalty, but it doesn’t say anything about whether they will levy a ‘careless’ penalty. It does read as if it had been carefully crafted to restrict its scope. The first phrase, “cleared me of any wrongdoing”, is vague, and could also just refer to being cleared of any ‘deliberate’ mistake. I also can’t find anything from her saying that she has paid the tax. It is being widely reported that she has paid and that there is no penalty, but I can’t see anything from her actually saying that. Am I missing something? Has she also made a live announcement that I have missed (and even if so, as a non-expert would she be as accurate in a live interview as she would in a more formal statement)? Also, the timing of the announcement looks like HMRC have rushed their decision out. That could be consistent with them having not reached a decision yet on the ‘careless’ point, but giving a minimal assurance that they will not be seeking a ‘deliberate’ penalty, since that is a much easier decision to make quickly.

Dan Neidle

May 15, 2026 10:58 am

Mr Aaronson was clear to me that HMRC agreed AR wasn’t careless so I accept that. Tax and interest have been paid.

Have they actually settled the ‘careless’ penalty point?

I may have missed something, but trying to trace everything back, the only definite statement I can find from her is that HMRC have “cleared me of any wrongdoing” and “I have been exonerated by HMRC of the accusation that I deliberately sought to avoid tax”.

The second phrase sounds as if HMRC have said that they will not charge a “deliberate” penalty, but it doesn’t say anything about whether they will levy a ‘careless’ penalty. It does read as if it had been carefully crafted to restrict its scope.

The first phrase, “cleared me of any wrongdoing”, is vague, and could also just refer to being cleared of any ‘deliberate’ mistake.

I also can’t find anything from her saying that she has paid the tax. It is being widely reported that she has paid and that there is no penalty, but I can’t see anything from her actually saying that. Am I missing something? Has she also made a live announcement that I have missed (and even if so, as a non-expert would she be as accurate in a live interview as she would in a more formal statement)?

Also, the timing of the announcement looks like HMRC have rushed their decision out. That could be consistent with them having not reached a decision yet on the ‘careless’ point, but giving a minimal assurance that they will not be seeking a ‘deliberate’ penalty, since that is a much easier decision to make quickly.

Dan Neidle

May 15, 2026 10:58 am

Mr Aaronson was clear to me that HMRC agreed AR wasn’t careless so I accept that. Tax and interest have been paid.

Tod O’Brien

May 14, 2026 2:14 pm

So, to summarise Ms Rayner was given a plethora of conflicting advice and took the last. As is usual in the law the test of “reasonable person” has been applied to Ms Rayner by HMRC. There is also the 3rd option where the opinion is based on evidence or information not available to you and so it is perfectly acceptable for tax policy associates to come to the opposite conclusion as HMRC and is even handed in mentioning that. Presumably this will now close the loophole for those who wish to exploit it in the future.

John

May 14, 2026 12:35 pm

How likely is it that HMRC agreed not to pursue a penalty in exchange for AR agreeing that the tax was payable?

Dan Neidle

May 14, 2026 5:03 pm

not at all

How likely is it that HMRC agreed not to pursue a penalty in exchange for AR agreeing that the tax was payable?

Dan Neidle

May 14, 2026 5:03 pm

not at all

David

May 14, 2026 12:33 pm

Got caught for interest though. Although nobody seems to mention this point as

Justin Bryant

May 14, 2026 12:23 pm

The other potential arguments include disability discrimination under HRA 1998 and otherwise, as it’s more likely that a parent of a disabled child will have such a trust for their child and be caught by the SDLT anti-avoidance rule here.

May 14, 2026 12:22 pm

I agree with Andrew’s perspective and think he raises a fair and logical point. It also prompts a broader question about similar cases where penalties have been issued retrospectively, even when individuals may have sought advice beforehand. In this particular instance, the individual was serving as Housing Secretary at the time of purchasing the property and did not pay the correct amount of stamp duty. Given the seniority of that role working closely with the Chancellor on housing policy and taxation it would be reasonable to expect a high degree of diligence. With such responsibility comes an expectation to take additional care in ensuring full compliance with the law, both in practice and as an example to others. From my perspective, this appears to reflect a lapse in judgement. At the very least, it raises the question of whether a penalty would have been appropriate, as well as whether this meets the standard expected for someone in such a senior public position. On a personal note, I currently live in a flat affected by cladding issues and am unable to sell. This is a widespread problem impacting tens of thousands of families who are effectively stuck in similar situations. If I were to attempt to move and purchase another property, I would still be required to pay additional stamp duty upfront. While there is provision to reclaim this within a certain timeframe, ongoing delays such as the three years of works we have already experienced with no clear end mean that some residents have missed that window altogether. For many of us, this creates significant financial uncertainty and pressure, particularly when there is no guarantee of being able to sell our original property within the required period. In that context, hearing that the Housing Secretary did not pay the correct amount of stamp duty naturally raises concerns about fairness and the example it sets, especially for those already facing challenging circumstances.

May 14, 2026 11:28 am

From the perspective of a non-tax specialised, I am not sure it is by any means obvious that the advice AR received fell foul of the Lithgow exception. It really depends what exactly was said. The Magnus report suggests that AR received two legal advices each of which made the positive assertion that tax was in fact due at the lower rate. Both advices stated that (i) the advice was not given by tax specialists, and (ii) that AR might want to or should get specialist tax advice. However what is not explained in the Magnus report is whether the caveat was explicitly related to the advice on the tax rate – ie if the advice actually spelled out that the author was not certain s/he was correct about the level of SDLT applicable, so that that his/her advice on this might be wrong. It seems to me unlikely that this was spelled out – because if you are giving a disclaimer of this sort then surely you would just not advise at all on tax. In the absence of a disclaimer like this, I do think that it is perfectly reasonable for a client to rely on advice given. Otherwise you are effectively say that reasonable client should be expected to read a suggestion that tax advice be sought as meaning that the tax advice that has been given (and paid for) is unreliable even though the advice itself does not spell it out. I simply don’t think that this is how the reasonable client would read such a suggestion. In my view, the reasonable client would assume that legal advice from a lawyer can be relied on unless they are expressly told it should not be relied on.

From the perspective of a non-tax specialised, I am not sure it is by any means obvious that the advice AR received fell foul of the Lithgow exception. It really depends what exactly was said.

The Magnus report suggests that AR received two legal advices each of which made the positive assertion that tax was in fact due at the lower rate. Both advices stated that (i) the advice was not given by tax specialists, and (ii) that AR might want to or should get specialist tax advice. However what is not explained in the Magnus report is whether the caveat was explicitly related to the advice on the tax rate – ie if the advice actually spelled out that the author was not certain s/he was correct about the level of SDLT applicable, so that that his/her advice on this might be wrong. It seems to me unlikely that this was spelled out – because if you are giving a disclaimer of this sort then surely you would just not advise at all on tax. In the absence of a disclaimer like this, I do think that it is perfectly reasonable for a client to rely on advice given. Otherwise you are effectively say that reasonable client should be expected to read a suggestion that tax advice be sought as meaning that the tax advice that has been given (and paid for) is unreliable even though the advice itself does not spell it out. I simply don’t think that this is how the reasonable client would read such a suggestion. In my view, the reasonable client would assume that legal advice from a lawyer can be relied on unless they are expressly told it should not be relied on.

Frustrated Tax advisor

May 14, 2026 11:21 am

A few points. 1. The test is by its nature subjective and is based on a taxpayer in her circumstances and whether the action was reasonable, not whether the comparator taxpayer is a Government Minister – I don’t think you lose the possible defence just because you are a Minister. 2. HMRC have a power in the law, for a careless penalty, to mitigate it, to zero under any special circumstances. they may well have done this. Almost all public output from politicians is spin and carefully worded, especailly when that person desperately wants the Big job, and so the no careless penalty comments might actually mean it was mitigated down. 3. Tax is by its nature highly dependent on the full facts. We don’t have them, but it is assumed HMRC do. It’s always risky to deliver tax opinions based on incomplete facts.

May 14, 2026 12:40 pm

True and very well put. I was involved in penalty work for over 15 years with HMRC and Inland Revenue and it is not as clear cut in the real world as Dan has tried to argue above. Indeed I am not surprised it has gone this way, and virtually said as much first time around,. There are certainly factors we don’t know and also factors HMRC might have that Ms Rayner doesn’t know about. What I would say is Ms Rayner’s status made no difference.

1. The test is by its nature subjective and is based on a taxpayer in her circumstances and whether the action was reasonable, not whether the comparator taxpayer is a Government Minister – I don’t think you lose the possible defence just because you are a Minister.

2. HMRC have a power in the law, for a careless penalty, to mitigate it, to zero under any special circumstances. they may well have done this. Almost all public output from politicians is spin and carefully worded, especailly when that person desperately wants the Big job, and so the no careless penalty comments might actually mean it was mitigated down.

3. Tax is by its nature highly dependent on the full facts. We don’t have them, but it is assumed HMRC do. It’s always risky to deliver tax opinions based on incomplete facts.

May 14, 2026 12:40 pm

True and very well put.

I was involved in penalty work for over 15 years with HMRC and Inland Revenue and it is not as clear cut in the real world as Dan has tried to argue above.

Indeed I am not surprised it has gone this way, and virtually said as much first time around,.

There are certainly factors we don’t know and also factors HMRC might have that Ms Rayner doesn’t know about.

What I would say is Ms Rayner’s status made no difference.

Kerry Stephens

May 14, 2026 11:15 am

You may well be right in your conclusion (I am in no position to judge), but it does leave a high profile precedent, albeit non binding, for others in the future. You have to feel some sympathy with Ms Rayner caught by complex legislation within what is anyway a bad tax

A.Turner

May 14, 2026 11:02 am

I, am not a tax expert, but surely, if she is deemed “not careless”, she must therefore be deemed ‘deliberate!

Dan Neidle

May 14, 2026 5:04 pm

no, it goes innocent mistake -> careless -> deliberate -> dishonest.

I, am not a tax expert, but surely, if she is deemed “not careless”, she must therefore be deemed ‘deliberate!

Dan Neidle

May 14, 2026 5:04 pm

no, it goes innocent mistake -> careless -> deliberate -> dishonest.

Lynda Creek

May 14, 2026 11:00 am

Thanks for the analysis but I disagree that her acts/omissions would meet the threshold of carelessness. This is because she sought advice from 2 lawyers, not just one, but also because all lawyers will caveat their responses in the way you state and the reasonable person would consider that advice from two who said broadly the same thing was sufficient. The careless threshold might be met where a person failed to seek advice at all or, where the advice was unequivocal, the person failed to follow it. As you know. For carelessness the law looks at what the reasonable person would consider and doesn’t bring in views (some of which have been terribly misogynistic and gingerist in my view) based on a subjective test. The standard is that of a reasonably prudent taxpayer. (The subjective test applies only where the taxpayer’s actions were deliberate or dishonest). In all truth if I had been in her position and received this advice from 2 lawyers I’d have thought it was sufficient so the late payment fine seems a fair and appropriate punishment

Thanks for the analysis but I disagree that her acts/omissions would meet the threshold of carelessness.

This is because she sought advice from 2 lawyers, not just one, but also because all lawyers will caveat their responses in the way you state and the reasonable person would consider that advice from two who said broadly the same thing was sufficient.

The careless threshold might be met where a person failed to seek advice at all or, where the advice was unequivocal, the person failed to follow it.

As you know. For carelessness the law looks at what the reasonable person would consider and doesn’t bring in views (some of which have been terribly misogynistic and gingerist in my view) based on a subjective test. The standard is that of a reasonably prudent taxpayer. (The subjective test applies only where the taxpayer’s actions were deliberate or dishonest).

In all truth if I had been in her position and received this advice from 2 lawyers I’d have thought it was sufficient so the late payment fine seems a fair and appropriate punishment

Ian Gilmore

May 14, 2026 10:48 am

Doesn’t this simply fall within pragmatic dispute resolution? There are opposing view set out by the two KCs that could have course be tested through the Courts – but with neither side having any certainty of which approach might ultimately prevail. Therefore, rather than risk total defeat, the parties have reached an acceptable compromise. If HMRC were to have proceeded to Court and won, they would no doubt have then sought a penalty on the basis you outline, but if the taxpayer were to come out “on top” HMRC wouldn’t even get the tax (just costs). The compromise settlement reached presumably reaches what each of the parties see as an acceptable outcome.

Ram Seshadri

May 14, 2026 10:46 am

I really think we need a AI model that gives consistent advice, so HMRC can provide tax advice. It’s clear that lawyers and tax specialists just drench their clients in caveats and it’s unclear who owes what.

May 14, 2026 12:44 pm

Yes, yes yes. I quite agree, one funded by HM government, they could start with employment status (I was only putting forward this at work last week) as the HMRC ESI (Employment Status Indicator) indicator is not good enough.

May 14, 2026 12:44 pm

I quite agree, one funded by HM government, they could start with employment status (I was only putting forward this at work last week) as the HMRC ESI (Employment Status Indicator) indicator is not good enough.

graham webber

May 14, 2026 10:44 am

I have seen the various public outrages on the lack of a careless penalty for Ms Rayner but confess that I find some of them driven by political leanings rather than facts. Recent Tribunal cases have demonstrated that the approach HMRC takes to penalties (i.e. charge them – see if they get paid – if not defend only the “worst” cases) is no longer seen by Judges as a slam dunk win for HMRC. As far as I can see here, Ms Rayner took advice. That was (paraphrasing) that this is a difficult area and perhaps more advice might be obtained. She did not get further advice, but she did seek the initial advice. That cannot be careless. If we are in a situation in which not seeking a second opinion (and if that was contrary to the first advice, a third opinion) is careless then where does that stop? Will HMRC be satisfied only when the “advice” is that more tax should be paid and therefore any advice that tax is not due is “careless”? I think not. That is not how I read the legislation or the trend in Tribunals at the moment.

Andrew

May 14, 2026 11:13 am

But there must be limits to “I sought advice” as an absolute defence. In this case she sought advice from two parties (a conveyancer and a trust lawyer) who did not specialise in this area, said they were not giving specialist tax advice and suggested/recommended that expert advice from a specialist was needed. She chose not to get that advice. So if I ask someone who does VAT compliance at a large firm if I can deduct certain expenses for income tax purposes, am I protected from penalties if their advice turns out to be wrong? Even if they told me “I do VAT not income tax so you should ask someone who does to check if what I have said is right” and I choose not to? Surely not?

May 14, 2026 11:48 am

Yes, I think it would be a very harsh verdict indeed for a tribunal to find that a person was not reasonable to rely on a lawyer’s advice that tax is due at a certain level because it was coupled with a “suggestion” (as was the case with one of the pieces of advice that AR received) that they might also wish to get a second opinion from a specialist.

I have seen the various public outrages on the lack of a careless penalty for Ms Rayner but confess that I find some of them driven by political leanings rather than facts.

Recent Tribunal cases have demonstrated that the approach HMRC takes to penalties (i.e. charge them – see if they get paid – if not defend only the “worst” cases) is no longer seen by Judges as a slam dunk win for HMRC.

As far as I can see here, Ms Rayner took advice. That was (paraphrasing) that this is a difficult area and perhaps more advice might be obtained. She did not get further advice, but she did seek the initial advice. That cannot be careless.

If we are in a situation in which not seeking a second opinion (and if that was contrary to the first advice, a third opinion) is careless then where does that stop? Will HMRC be satisfied only when the “advice” is that more tax should be paid and therefore any advice that tax is not due is “careless”? I think not. That is not how I read the legislation or the trend in Tribunals at the moment.

Andrew

May 14, 2026 11:13 am

So if I ask someone who does VAT compliance at a large firm if I can deduct certain expenses for income tax purposes, am I protected from penalties if their advice turns out to be wrong? Even if they told me “I do VAT not income tax so you should ask someone who does to check if what I have said is right” and I choose not to? Surely not?

May 14, 2026 11:48 am

Charlie

May 14, 2026 10:42 am

There are perhaps two other possibilities for what has transpired here: (1) The narrative to the press is not fully correct: Angela Rayner was careless but was given full penalty mitigation for a good and (technically) unprompted disclosure – i.e. telling, helping and giving access. She and her aides could plausibly but incorrectly interpret this as no penalty equals no wrongdoing and spin that to the press. (2) Rayner lucked out with the case officers: reasonable care is subjective & woolly. HMRC officers are human too and I have found, in practice, can be swayed by complexity & rarity of the case (i.e. that this was by no means a simple or obvious error) and the human factors behind it (providing for disabled son etc.). I wouldn’t necessarily assume this was passed far up the chain, at which point such a decision could be overruled – HMRC might have wanted to treat this like any other disclosure.

Ringo Mountbatten

May 15, 2026 2:06 pm

Not sure how they decided it was unprompted CH82420 states “A disclosure is unprompted if it is made at a time when the person making it has no reason to believe that we have discovered or are about to discover the inaccuracy or under-assessment” If the whole country is talking about it, surely HMRC are aware.

Ringo Mountbatten

May 15, 2026 2:06 pm

Not sure how they decided it was unprompted

CH82420 states “A disclosure is unprompted if it is made at a time when the person making it has no reason to believe that we have discovered or are about to discover the inaccuracy or under-assessment”

If the whole country is talking about it, surely HMRC are aware.

Kevin Myers

May 14, 2026 10:38 am

During a tax investigation / enquiry then there is correspondence between advisors / HMRC on the salient points. But it invariably comes down to a “settlement” offer being made. So agree to pay the tax, interest there is no discretion, the penalty becomes the moot point and in practice the stumbling block to anything getting signed. Case that stalled for 15 months as the client refused to accept any assertion of “careless” But if the advisors offered 0% and gave the reasons, one of which may be the level of advice actually received plus btw we have a KC that offers a different view that it should be the lower rate. HMRC may have been pragmatic. But I think the general public would be surprised the level of horse trading that does arise on penalties eg I had one at “7.39%” once because client had paid on account and that % gave £nil left due

But if the advisors offered 0% and gave the reasons, one of which may be the level of advice actually received plus btw we have a KC that offers a different view that it should be the lower rate. HMRC may have been pragmatic. But I think the general public would be surprised the level of horse trading that does arise on penalties eg I had one at “7.39%” once because client had paid on account and that % gave £nil left due

Peter Bottomley

May 14, 2026 10:26 am

For fuller understanding, is it right that if the transaction had been about a year later, the beneficiary’s age would have ruled out the extra payment? (This question does not challenge the article.)

Sarah

May 14, 2026 10:23 am

I think Angela R says HMRC says the error wasn’t deliberate? (Rather than not careless?) – and perhaps no fine is contingent on there being no other episodes in a set period? (I once made a really silly mistake for a much smaller amount and HMRC took that contingent view).