Brexit and the waning days of the United Kingdom

[Sheilbh]

Correction. I had heard it was Shoosmiths but they've just denied it.

I think this is sort of the point on the possible reckless mistake - it seems like she got advice on different bits from different people. But she hadn't disclosed everything to someone to do a view as a hole - Neidle's been asking basically whether the people giving the stamp duty advice were aware of the trust because I think that's very important in the advice they'd give.

And agree on a conveyancer - but I think if you've got trusts involved you can't rely on a conveyancer. Or really for anything beyond simple-ish stamp duty.

[garbon]

Also Jos, you literally posted a Guardian article trying to kick that off.

It's a little bit like "the MSM won't cover this!" with a link to a BBC article.

I'd say don't be churlish. It easy to understand the difference between one article by the Guardian and the non-stop daily coverage of Rayner.  Though I'd say obviously makes more sense to cover a member of the government and given Farage story was only published today, a bit soon to complain that it hasn't been given legs.

[Sheilbh]

Fair

But also the Guardian have it as their number two story, framing it as "exclusive" and it's by Pippa Crerar who's pretty big (she was, at the Mirror, the reporter who broke Partygate). So I think they're trying to push it.

Having said all unless something else comes out, I don't think it's a massive story on Farage. There needs to be something more than he's set up a Ltd for external earning (I'd add that it is completely standard practice within media - including, I suspect, Guardian freelancers and commentators - which may inhibit the press' investigatory zeal...)

[garbon]

And she is gone.

[crazy canuck]

In the UK lawyers who advise about trusts don't know the tax consequences of what they are advising?

[Tamas]

There is also the possibility she was told not to do it but still decided to chance saving that 40k.

[Richard Hakluyt]

One point about Farage having a private company so he pays 25% dividend tax instead of 40% income tax. This is absolutely standard practice for contractors. I don't think it will get much traction as we all know a contractor or several who have done this. Failing to pay £40k stamp duty on what turns out to be an £800k second home is nowhere near as common and is far more easily thought of as a typical "elite" move.

And I would repeat that she was a government minister; Caesar's wife rules apply.

[Josquius]

Is it a con to use available tax loop holes or standard practice.

It can be both.
Its like Ali. She was acting perfectly legally with her selling of her house and renting it out.... But what is legal and what is good are different things.
If Farage's finances were promoted more you'd see quite a lot of anger from working people.

And what you call 'stumbling into not paying a few quid' was described in Sheilbh's article as 'reckless' and 'careless' and wasn't it '£40k' not 'a few quid'?

Its a lot of money to normal people. But when you're in a position like she was and buying a £800k flat....She wouldn't have missed it.

[Gups]

Yep. Loads of people do that. Its entirely legitimate although I don't know the policy reason for it.

[crazy canuck]

Neidle uses a different and tighter definition of tax avoidance than the one I have been using. I have been assuming that buying a bottle of whiskey at the airport or making ISA investments are tax avoidance; in plain English they are ways of avoiding tax but it seems that the legal definition involves "what parliament intended". I don't like that because how is someone to know what Parliament intended?

I think a big risk we run is Reform winning the next general election and forming a government with utterly inexperienced ministers who will have no grip over their departments. Then we will get civil service rule and the slow decline will continue...not good.

So I reckon they need some of the experience that the more right wing parts of the Tory party could bring over. At which point the "same old Tories" line will have some force as you say.

No, you had it right the first time. Tax avoidance is just that, structuring your affairs in a way that avoids the pain of taxes.  There is nothing illegal or an immoral about doing that.  Not avoiding taxes is just plain stupid.

Why would anyone pay more tax than they are legally required to pay.

What I am seeing in this thread is some people having a misunderstanding of what a tax system is. 

I am sure, or at least I hope, that everyone here claims all the deductions that are available to them when they fill out their tax returns.  You are all engaging in tax avoidance.

[Gups]

Neidle uses a different and tighter definition of tax avoidance than the one I have been using. I have been assuming that buying a bottle of whiskey at the airport or making ISA investments are tax avoidance; in plain English they are ways of avoiding tax but it seems that the legal definition involves "what parliament intended". I don't like that because how is someone to know what Parliament intended?

I think a big risk we run is Reform winning the next general election and forming a government with utterly inexperienced ministers who will have no grip over their departments. Then we will get civil service rule and the slow decline will continue...not good.

So I reckon they need some of the experience that the more right wing parts of the Tory party could bring over. At which point the "same old Tories" line will have some force as you say.

No, you had it right the first time. Tax avoidance is just that, structuring your affairs in a way that avoids the pain of taxes.  There is nothing illegal or an immoral about doing that.  Not avoiding taxes is just plain stupid.

Why would anyone pay more tax than they are legally required to pay.

What I am seeing in this thread is some people having a misunderstanding of what a tax system is. 

I am sure, or at least I hope, that everyone here claims all the deductions that are available to them when they fill out their tax returns.  You are all engaging in tax avoidance.

By some people, you mean Jos.

[crazy canuck]

I was trying to be polite 

[Sheilbh]

No, you had it right the first time. Tax avoidance is just that, structuring your affairs in a way that avoids the pain of taxes.  There is nothing illegal or an immoral about doing that.  Not avoiding taxes is just plain stupid.

Why would anyone pay more tax than they are legally required to pay.

What I am seeing in this thread is some people having a misunderstanding of what a tax system is. 

I am sure, or at least I hope, that everyone here claims all the deductions that are available to them when they fill out their tax returns.  You are all engaging in tax avoidance.

I agree - I think the narrower definition that Neidle is making is around tax evasion.

So there is basically taking advantage of tax benefits parliament has legislated for (ISAs, pensions etc) and tax avoidance which is lawful which is using a scheme to reduce your tax benefit through ways that are technically lawful but not as intended by parliament (there's been a huge crackdown on this by HMRC over the last 10-20 years so not many of these schemes left).

Outside of that there's unlawful tax avoidance which is basically what happens when that goes wrong - you've structured your affairs in a way to reduce your tax bill but in a way that you thought (or were advised) was lawful (if risky). Then there's reckless non-compliance - which is where Rayner seems to be. And then there's tax evasion which is a criminal offence - you know that you are structuring your affairs in an unlawful way to not pay tax. So to RH's comment on how you're supposed to know what parliament intends that's sort of for the tax advisors and there's huge amounts of tax law and guidance by HMRC - but that is also basically the mens rea of tax evasion which is a criminal offence not just a civil wrong.

There is also the possibility she was told not to do it but still decided to chance saving that 40k.

Its a lot of money to normal people. But when you're in a position like she was and buying a £800k flat....She wouldn't have missed it.

This is where I think the ethics advisor is useful:

Taken together, it appears that – particularly in the context of the specialist type of trust in question – the interpretation of these rules is complex. With Ms Rayner's full cooperation and assistance, I have reviewed relevant documentation from the property transaction. This has included the advice she received at the time from the legal firms involved and the associated documentation that was prepared for her to effect the purchase. This advice gave rise to Ms Rayner's understanding – which I consider to have been held in good faith – that the lower rate of SDLT was applicable when purchasing the property in Hove.

It is not necessary for me to detail the specific contents of this advice or the associated documentation but, having reviewed it, I would draw four conclusions:

    a) Ms Rayner was open about the existence of the trust and considered that, between them, the firms advising her had appropriate knowledge and awareness of the details and circumstances of the trust;

    b) On the basis of the advice she received, Ms Rayner believed that the lower rate of SDLT would be applicable; indeed she was twice informed in writing that this was the case; but

    c) In those two instances, that advice was qualified by the acknowledgment 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 have advised her that a higher rate of SDLT was payable.

I don't think there's any indication that it was deliberate. But point c is really key for me. She was told that she should seek expert tax advice on this point and didn't - to my mind that's why it falls in reckless non-compliance rather than any form of avoidance or evasion. It also sounds to me a lot like she kept things very siloed - so the property conveyancers were just looking at that and not really aware of the trust while the trust lawyers were looking at that but not really aware of the property piece and no-one was looking at the whole picture.

I would like to see that advice because from a lawyer's perspective you will often scope the advice to say "we've not looked at x, y and z - there are risks here and you should consider getting specialist advice". That, to me, is the standard CYA language. But actually recommending someone gets expert advice is what I think you'd do if you think there's a real risk - but it's not your area and it's out of scope of your instructions/fees.

I like Rayner - and I think she'll be able to come back from this (went quickly, apologised and admitted a mistake, plus the context of a complicated family life and trust for her disabled son is sympathetic). But I'd add the area where I am slightly less forgiving of Rayner is that her "allies" were briefing to newspapers that she'd received specialist advice signing off on all this. It became public knowledge that was from Shoosmiths and I think that's why Shoosmiths - which is unusual - publicly came out to say they did not provide advice on this. So I think that was untrue from Rayner - and there is a little bit of a record there with her. There's been form of relatively minor but easily disprovable lies from Rayner and her team (I remember one when she was falling out with Starmer when she said she hadn't been briefed on something and Starmer's team leaked the meetings they'd had on it.

[Tamas]

If you are an employee and not a contractor you don't have any meaningful wiggle room.

[Sheilbh]

One point about Farage having a private company so he pays 25% dividend tax instead of 40% income tax. This is absolutely standard practice for contractors. I don't think it will get much traction as we all know a contractor or several who have done this. Failing to pay £40k stamp duty on what turns out to be an £800k second home is nowhere near as common and is far more easily thought of as a typical "elite" move.

And I would repeat that she was a government minister; Caesar's wife rules apply.

Totally agree on this - also she went in very hard on Tory ministers with similar issues/scandals. If you put the boot in, in opposition, you're going to get it in government.

See also some attacks in the Express on government use of credit cards and private flights which I always thought was a very unwise attack line by Labour for exactly that reason.