Do 'growth shares' in a family investment company have zero day-one value for inheritance tax?

No. HMRC expects an open-market valuation. A contingent or probabilistic payoff still has a present value, so growth shares typically have a positive day-one value and cannot be assumed to be £0.

Does putting growth shares into a discretionary trust trigger a 20% entry charge?

Usually yes. A gift into a relevant property trust is a chargeable lifetime transfer (CLT). After the available nil-rate band, a 20% IHT entry charge can arise, based on the market value of what is transferred.

Are there 10-year anniversary charges on a trust that holds growth shares?

Potentially. Discretionary trusts can face a periodic (up to 6%) charge on their value above the nil-rate band at each 10-year anniversary. Whether and how much is charged depends on the open-market value of the trust assets at that time.

If growth shares are hard to value, can I treat them as having 'no determinable value'?

No. Difficulty does not mean zero. Valuation must still follow the open-market hypothesis, using accepted techniques (e.g., scenario analysis/DCF, option-style approaches, and appropriate discounts) to arrive at a supportable figure.

Does creating growth shares reduce the value of the founders’ ('freezer') shares?

Yes. If growth is diverted to a new class, the founders’ shares no longer capture that upside. The combined company value must be allocated between classes, so freezer shares are worth less than the whole-company value.

What are typical valuation inputs for growth shares?

Expected growth paths, timing of realisation (e.g., sale in 10+ years), discount rate reflecting risk, and share-class adjustments (e.g., non-voting and illiquidity discounts). The result is a range, not a single 'precise' number.

If no IHT account is filed for a CLT, how long can HMRC assess inheritance tax?

If no account is delivered, HMRC can generally assess up to 20 years. If an account is delivered, the usual 4/6/20-year time limits apply depending on behaviour.

Do growth shares with a 'hurdle' always have no value?

No. A higher hurdle can lower day-one value, but unless the hurdle makes future payoff virtually impossible, some option-like value usually remains. Valuation must reflect probability, timing and risk.

Is a 'family investment company' structure automatically caught by DOTAS?

Not automatically. DOTAS depends on specific hallmarks (e.g., premium fee, confidentiality, IHT hallmark with contrived steps). Whether disclosure applies turns on the features and purpose of the specific scheme. This scheme may well be disclosable

Who should advise on growth-share and trust planning?

Use regulated professionals—e.g., chartered tax advisers/solicitors with share-valuation expertise and experience with the relevant property regime. Unregulated promoters do not provide the protection or standards required for high-risk planning.

If a brochure says 'no 10-year charges' and 'no determinable value', can I rely on that?

Treat such claims with caution. HMRC applies an open-market valuation approach, and trusts are within the relevant property regime. Always obtain a defensible valuation and formal advice before implementing planning.

What’s the up-front IHT risk if growth shares are asserted to be worth £0?

HMRC may challenge the valuation, assess an entry charge based on a positive market value, and consider penalties if the failure to value/report is viewed as careless - which it often will be.

Why could PPE Medpro file abridged accounts despite £200m of contracts?

UK law classifies “small” companies using a two-out-of-three test (turnover, balance sheet total, employees). A company meeting any two thresholds can use small-company filing options, which may exclude publishing a profit and loss account.

What are the small company thresholds?

As currently set, a company is small if it meets any two of: turnover at or below ~£15m, balance sheet total at or below ~£7.5m, and 50 or fewer employees. Thresholds have changed over time; the principle is two out of three.

What is the origin of the two-out-of-three small company test?

It derives from the EU Fourth Company Law Directive (1978), retained and updated by the 2013 EU Accounting Directive. The UK adopted this framework in company law.

What is the difference between abridged, filleted, and micro-entity accounts?

Abridged accounts allow reduced detail in the statements; filleted filing allows omission of the profit and loss account from Companies House; micro-entity accounts are a simplified regime for the very smallest companies with minimal disclosures.

Do HMRC still receive a profit and loss account even if Companies House does not?

Yes. Companies submit full statutory accounts, including the P&L, to HMRC with the corporation tax return. The omission applies to public filing at Companies House, not to HMRC.

Are the rules changing so that more companies must publish a P&L?

The Economic Crime and Corporate Transparency Act provides for reforms requiring all companies to file a profit and loss account and removes abridged options, with implementation currently slated from 2027.

Why does the article argue the current definition is outdated?

Modern businesses can have very high revenues with small headcounts and light balance sheets. The two-out-of-three test lets such firms qualify as “small,” undermining transparency while granting limited liability benefits.

What change does the article propose?

Require companies to meet all three thresholds—turnover, balance sheet total, and employees—to use small/micro exemptions, with lower thresholds aimed at genuinely small businesses. Large-revenue firms would publish full accounts.

Would this increase compliance costs for micro businesses?

The proposal aims to keep costs low by preserving exemptions for truly small firms and, where exempt, requiring only headline figures (turnover and profit) rather than a full P&L breakdown.

What is the public-interest case for fuller disclosure?

Limited liability is a public privilege. Basic transparency—at least turnover and profit—helps customers, suppliers, creditors, and taxpayers assess counterparties and deters abuse.

Does the article allege definitive profit figures for PPE Medpro?

No. It cites reports of large profits but notes that abridged filings mean the public record lacks a full P&L, underscoring the transparency gap the article seeks to fix.

Did Keir Starmer create a trust over the field?

Starmer referred to gifting the land to his parents “for as long as they should live”, wording consistent with a life-interest arrangement. He has neither confirmed nor denied; the article explains the legal implications of that wording.

What is a life-interest (interest-in-possession) trust?

A structure where named beneficiaries may use or enjoy property during their lifetime, without owning it outright. On the life tenant’s death, the property passes as specified by the trust (which can include reversion to the settlor).

Does a reverter-to-settlor trust keep assets out of the life tenant’s estate for IHT?

Generally, yes: while life-interest property is usually treated as part of the life tenant’s estate, there is a statutory exception where the property reverts to the settlor. The article sets out how that rule interacts with the facts here.

Was any inheritance tax (IHT) likely to be due on the parents’ estate?

On the available figures, the estate appears below the combined thresholds (nil-rate band and residence nil-rate band), so no IHT seems to have been payable regardless of the field’s treatment. The piece explains the numbers and caveats.

Did the arrangement amount to tax avoidance?

Intent is unknown. The article distinguishes between the legal effect of a life-interest structure and the separate question of motive, and notes that on current evidence no IHT underpayment is indicated.

What evidence underpins the article’s analysis?

It relies on publicly available documents (including Commons standards correspondence) and primary legislation.

Did Carter-Ruck act for OneCoin?

Yes. In 2016–17 Carter-Ruck acted for OneCoin and sent libel threats to critics while OneCoin was a multibillion-dollar fraud. We host and link to primary documents and analysis on this page.

What is happening at the Solicitors Disciplinary Tribunal (SDT)?

The SRA is prosecuting Carter-Ruck partner Claire Gill at the SDT. After an anonymity and ‘privilege’ bid, the Tribunal ordered disclosure, and filings are being published.

What is the iniquity exception to privilege?

Legal professional privilege does not apply to communications furthering fraud or other iniquity. Where the purpose is to further wrongdoing, privilege falls away on a document-by-document basis.

What about Carter-Ruck and Harlequin?

In 2011 Carter-Ruck won libel damages for Harlequin; the scheme was later exposed as fraudulent and its boss was jailed. We explain the timeline and link sources in the article.

Blog

Samuel Leeds: the “property guru” and his bogus tax loopholes
Samuel Leeds is a self-proclaimed “property guru”. He makes substantial sums by using hard-sell tactics and conspiracy theories to sell expensive courses on property investment to people who can’t afford it. Mr Leeds makes an array of claims on social media about how to “pay zero tax” and “learn the tax loopholes that the rich use“. We’ve reviewed these claims, and many are simply wrong. One is particularly egregious: the idea that you can repeatedly buy a dilapidated property, refurbish it and sell it, and claim main residence capital gains tax relief each time. Mr Leeds says he’s used this “strategy” himself multiple times. But the strategy doesn’t work – there are rules that specifically prevent it. If Mr Leeds really used the “strategy” then it wasn’t clever tax planning, but a failed attempt at tax avoidance – and he may owe significant tax to HMRC.

Mr Leeds claims tax expertise beyond most accountants. The reality is repeated, basic errors. That raises an obvious question about everything else he sells.

Contents
The Leeds “flipping” scheme The legal reality Other claims Trusts IHT planning Holding UK property offshore Employing your kids Stamp duty and VAT on “uninhabitable” properties The course Wear your brand What if you’ve used any of these schemes?Conspiracy theories Samuel Leeds’ response

The Leeds “flipping” scheme

Samuel Leeds says he knows a lot about tax:

Here’s one of his claims:

It’s a simple claim: that you can buy a run-down property, renovate it, sell it – and the sale is exempt from capital gains tax. Mr Leeds says he’s done this “multiple times”.

This is not a one-off. Mr Leeds makes the same claim in this video, saying you can “continue to do this again and again, completely tax free”:

And here:

And again here, here (in a video entitled “how to avoid capital gains tax”), here, here, here.

The idea that “the rich” move into uninhabitable houses to save tax is obviously daft. However there’s a bigger problem.

The legal reality

The main residence exemption is in sections 222 and 223 of the Taxation of Chargeable Gains Act 1992. This requires that a property is your “sole or main residence”. That’s an immediate problem for the Leeds scheme because, as the First Tier Tribunal said in the Ives case:

“The cases on the meaning of “residence” make it clear that there is a qualitative aspect to the question whether a person is occupying a property as a residence. This would lead us to conclude that a person who sets out to live in a property only whilst working on and subsequently selling it, and who has no real intention of making the property their settled home, is almost certainly not occupying the property as a residence.“

This is exactly what Mr Leeds is proposing.¹

So the basic answer is that the Leeds scheme simply doesn’t work, because you may be living in the property, but it’s not your “main residence”.

There’s a further problem – a specific exclusion from the exemption in section 224(3) of the Taxation of Chargeable Gains Act 1992:

By his own admission, Mr Leeds’ purpose for acquiring the properties was to realise a gain. So, even if each of the properties was his “main residence” (doubtful), section 224(3) applied and he should have paid capital gains tax.

That’s not the only way this goes wrong – repeated acquiring, renovating and “flipping” of properties may constitute a property development trade², if the acquisition was for the purpose of renovating and “flipping”.³ If it does, then the profits are taxable to income tax rather than capital gains tax – a higher rate, and no main residence exemption.⁴

None of this is very obscure or difficult, and in our experience the law is widely understood by property investors.

We can see only one case where Mr Leeds warns people that in fact the main residence exemption is not available if you buy with the intention to sell.⁵ So, given he knows this, why does he say everywhere else – very clearly – that you can use the exemption in such a case?

Other claims

Mr Leeds makes a variety of other tax claims:

Trusts

For most people, trusts are not good tax planning. Putting property in trust (above the £325k zero rate band) is a lifetime chargeable transfer giving rise to an immediate 20% inheritance tax charge. The trust is then subject to an inheritance tax “anniversary charge” of up to 6% of the trust’s asset value every ten years (again above the £325k zero rate band).⁶ There are lots of people selling trust schemes which supposedly avoid these taxes – the schemes we’ve reviewed do not work.⁷

IHT planning

Here’s another claim from Mr Leeds:

This is another strategy that doesn’t work. If you continue to live in your house after gifting it to your kids, then the “reservation of benefit” rules apply, and inheritance tax applies as if you hadn’t given the house away.⁸ ⁹

Holding UK property offshore

And here’s Mr Leeds claiming last year that someone living in Monaco pays no UK tax on UK property income:

This is a basic misunderstanding of the fundamental principle of UK property taxation: UK property income is taxable no matter where in the world you live.¹⁰ Our founder, Dan Neidle, challenged Mr Leeds on this in 2024 – Mr Leeds conceded he had “misunderstood”.

Employing your kids

In this video, Mr Leeds suggests that your company can employ your spouse or your kids (from as young as 13 years old), pay them £12,500 each, and so extract cash from the company tax-free.¹¹

If (as seems likely) the spouse and children aren’t doing anything for their money, or just doing trivial tasks, then it’s non-deductible for the company. If the children are under 14 then their employment may be illegal, with no tax deduction available even if they are doing genuine work.

HMRC may also challenge this as a diversion of the owner’s income. The usual approach is to deny a corporation tax deduction where the payments are not wholly and exclusively for the trade, and/or to treat the payments as the owner’s remuneration in substance. In some cases HMRC may also invoke specific anti-avoidance rules, including the settlements rules.

Stamp duty and VAT on “uninhabitable” properties

This video makes two misleading claims about saving tax when buying uninhabitable properties:

First, an incorrect explanation of the stamp duty¹² rule for uninhabitable properties:

For example, let’s say you buy a rundown house for £150,000 as a buy/refurbish/refinance or a flip investment property. Normally, as a second property, an investment property, you’d pay 5% [stamp duty] on the first £250,000. That’s £7,500 cash up front in stamp duty tax. But because the property lacks a kitchen, bathroom, or heating, it qualifies as uninhabitable. So you pay zero stamp duty up to the first £150,000 and then just 5% on any excess amount, saving you £7,500. The key is getting a RICS surveyor to confirm that the property is uninhabitable.

This is not correct. The “uninhabitable property exemption” (strictly the question of whether a property is “suitable for use as a dwelling“) will only apply in unusual cases. HMRC guidance at the time was clear:¹³

A very high proportion of the SDLT repayment claims that HMRC receives in relation to this area are wrong. Customers should be cautious about being misled by repayment agents into making incorrect claims.

Whether a property has deteriorated or been damaged to the extent that it no longer comprises a dwelling is a question of fact and will only apply to a small minority of buildings.

If the building was used as a dwelling at some point previously, it is fundamentally capable of being so used again (assuming there is no lack of structural or other physical integrity preventing such use). Such a building is likely to be considered “suitable for use as a dwelling”, even if not ready for immediate occupation at the time of the land transaction.¹⁴

It follows that a surveyor’s opinion on the current condition does not mean that the exemption applies.¹⁵ The fact that (for example) a property temporarily lacks a kitchen or bathroom, or doesn’t have heating, doesn’t mean it’s not a dwelling.

Second, a misleading explanation of VAT:

Let me explain how VAT reclaim on renovations works. If you’re about to renovate a property, this next law could save you thousands in VAT value added tax savings.

If a property has been empty, like many have for two years or more, you qualify for a reduced 5% VAT on renovation costs instead of 20%. For example, say you buy a rundown house that’s been vacant for a few years, you budget £100,000 for the refurb, normal VAT will be 20%, which is a £20,000 tax bill. But the reduced VAT at 5% is just £5,000 meaning you’re saving £15,000. And to qualify for this relief, all you have to do is prove the property was empty with council tax records or utility bills, and then work with a VAT registered contractor to apply the discount.

The 5% rate for renovation of empty properties applies to building materials and works to the fabric of the building. HMRC treat several common refurbishment items as standard‑rated, including the erection/dismantling of scaffolding, professional fees (architects/surveyors/consultants), landscaping, hire of goods, and the installation of goods that are not ‘building materials’ (for example carpets or fitted bedroom furniture). In practice someone undertaking a £100k refurbishment will almost never qualify for the 5% rate on all of it.

Wear your brand

Here’s Mr Leeds saying that you can buy clothing with your branding and claim a tax deduction:

This is poor tax planning. You’re unlikely to get a tax deduction because the clothing isn’t “wholly and exclusively” for the purposes of the business. Worse, clothing is usually a “benefit in kind” and so taxable for employees – i.e. potentially a worse result for an owner-managed business than if you paid yourself a salary and used that to buy the clothes.

The strange thing is that the video above is from Autumn last year. But five years earlier, Samuel Leeds said that he’d tried claiming a deduction for branded clothing and it didn’t work:

“My clothes. I tried it. I tried getting my clothes tax deductible, and putting my name on it and stuff. Didn’t get it past HMRC. So I was, like, forget it.”

The Samuel Leeds course

Samuel Leeds markets a course on how to “protect your wealth and legally avoid property taxes”.

It costs £995. That’s a lot of money for generalised advice that doesn’t relate to your particular circumstances – it’s unlikely there’s anything here that couldn’t be found free on the internet. And if the course reflects Samuel Leeds’ view of “tax loopholes” then we expect that much of it will be wrong.

The money would be better spent on specific advice from a qualified adviser.

What if you’ve used any of these schemes?

If you’ve used any of the “strategies” outlined above then we’d recommend that you speak to a qualified tax adviser as soon as you can. That usually means from someone at a regulated firm (accounting firm or law firm), and/or with a tax qualification such as STEP, or a Chartered Institute of Taxation or Association of Tax Technicians qualification.

Don’t speak to HMRC until you’ve received professional advice. Keep copies of all the material you relied on (videos, course notes, messages) and a timeline of what you did and when – your adviser will need it.

Conspiracy theories

Mr Leeds promotes his tax strategies and courses using false conspiracy theories about tax and HMRC.

This video claims that the World Economic Forum has a “plan to seize your home” and wants to “own everything and take your house in the process”. This is a conspiracy theory based on a misreading of a short 2016 essay by a Danish MP: “Welcome to 2030: I own nothing, have no privacy, and life has never been better“. It was a speculative thought experiment by a single author – not a policy proposal, plan, or WEF programme. The WEF itself has explicitly stated that the article does not reflect its agenda and that (rather obviously) it does not advocate abolishing private property.

Another video is entitled “HMRC WILL come for YOU in 2026”, and claims that the “new”¹⁶ procedure for “direct recovery of debts” means that, if HMRC think you owe them money, they can simply take the money from your bank account. That is not correct: the procedure applies only to debts that are already due and legally established – typically after HMRC has undertaken an enquiry, closed the enquiry concluding that the taxpayer owes tax, and the taxpayer has either not appealed, or any appeal has been concluded. It doesn’t bypass enquiries or disputes; it comes after them. There’s an excellent overview in this House of Commons Library briefing. The video concludes by promoting Mr Leeds’ other video which he says will help you learn ways to potentially bring your tax bill down to zero.

We don’t know why Mr Leeds promotes conspiracy theories that just a few minutes’ research reveals have no factual basis.

Samuel Leeds’ response

Tax adviser Rowan Morrow-McDade criticised Mr Leeds on LinkedIn for sharing incorrect property tax advice:

Mr Leeds initially tried to defend his claims. As John Shallcross, a stamp duty land tax specialist, pointed out, Mr Leeds was citing cases he didn’t understand.

In response, Mr Leeds accused tax advisers of “gatekeeping”:

We asked Mr Leeds for comment before publishing this story and asked, specifically, if he really had – as he claims – “flipped” properties multiple times and claimed the CGT main residence exemption. He refused to comment, instead giving us a generic denial:

The post you have shared describes a high level example of a principal private residence strategy. It is not a statement that repeated property trading would be exempt from tax regardless of facts or intention.

I have not unlawfully failed to pay capital gains tax. Any suggestion otherwise is incorrect.

I do not provide personalised tax advice and I do not advise people to engage in unlawful behaviour. As you know principal private residence relief depends on individual circumstances and intention which cannot be determined from a short social media post.

If you intend to allege unlawful conduct by me personally you will need to provide evidence to support that claim. Otherwise I expect that allegation to be removed from any publication.

I will respond publicly once your article is published.

The full email exchange is here.

The problem with Mr Leeds’ “high level example of a principal private residence strategy” is that the strategy simply does not work. If you intend to acquire, refurbish and sell properties, then case law and legislation mean that the main residence exemption will not apply. It’s not about the detail and intention – the basic concept is a failure.

If Mr Leeds’ claim is true, and he really did acquire, refurbish and sell multiple properties, then in our view he should have paid capital gains tax or income tax. If he didn’t, then that suggests tax was underpaid – it’s “failed tax avoidance“. Of course it’s also possible that Mr Leeds exaggerated, and he either hasn’t used this approach at all, or he has exaggerated (for example, because it wasn’t a deliberate strategy at the time, and he didn’t intend to sell the property). He’s certainly exaggerating when he claims “the rich” use this strategy – it goes without saying that “the rich” do not in fact repeatedly move into unliveable houses to save tax.

Mr Leeds repeatedly says he’s not qualified to give tax advice and viewers of his videos should speak to an accountant. That’s no excuse for proposing “strategies” that don’t work. It’s also undercut when he says things like this:

This level of confidence is dangerous – particularly when his courses seem targeted at people on low incomes who may not be able to afford an accountant.

Our view is simple: it’s deeply irresponsible to market tax “loopholes” that don’t work. Mr Leeds claims to know more about tax than most accountants. Yet the examples above contain repeated, basic errors. If this is his “tax expertise”, readers can draw their own conclusions about the rest of his courses.

Many thanks to K and P for help with the tax analysis, to Rowan Morrow-McDade for his original LinkedIn post, and to John Shallcross for his invaluable assistance with the SDLT aspects of this report.

Videos and images and text © Samuel Leeds and republished here in the public interest and for purposes of criticism and review.
Footnotes
1. There were similar comments in the Mark Campbell case:
  
  “Having considered all of the evidence, cumulatively, I find that the Appellant did not intend that any of the properties would be his main residence. This is because the evidence before me does not support a finding that there was any degree of permanence, continuity or expectation of continuity in relation to any of the properties. In reaching these findings, I have considered the nature, quality, length and circumstances of any occupation relied on.“ ↩︎
2. Or possibly a “venture in the nature of a trade“, even if not repeated. ↩︎
3. In Ives, it was not – there were successive purchases, renovations and sales, but the Tribunal accepted evidence that each purchase was intended to be a permanent residence, but for various reasons Mr Ives later had to move house. ↩︎
4. The usual HMRC practice is to run trading and section 224(3) arguments in the alternative. ↩︎
5. And note that the reference to “income tax” here is also wrong – possibly Mr Leeds is conflating the trading rules with section 224(3). ↩︎
6. Subject to exemptions like business property relief, which in principle applies to shares in a trading company. However such exemptions also apply if the assets/shares are held directly; the trust is not creating the exemption. ↩︎
7. One particular variant that’s sometimes marketed uses the employee benefit trust rules, as EBTs in principle aren’t subject to inheritance tax. However EBTs are intended for employee remuneration; using them primarily to benefit participators/owners attracts intense HMRC scrutiny and specific anti-avoidance rules. We are not suggesting Mr Leeds uses an EBT. ↩︎
8. In principle you can gift your house to your kids and then continue living in it, with your kids charging you a market rent; that’s often an undesirable outcome, particularly as the rent will be taxable for your children. ↩︎
9. However you did give the house away as far as capital gains tax is concerned, meaning that this “strategy” doesn’t save inheritance tax, but can result in an increased capital gains tax bill for your children. ↩︎
10. And if you use a letting agent they’re required to withhold tax when paying you, unless you obtain approval from HMRC to be paid without withholding and then file a self assessment. ↩︎
11. i.e. because he’s claiming the salaries are tax-deductible for the company, but below the personal allowance and so not taxable for the kids. ↩︎
12. The tax in question is “stamp duty land tax” (SDLT). It’s almost always called “stamp duty” in popular discourse, but “stamp duty” is actually a completely different tax. With apologies to tax advisers, we’re going to use the term “stamp duty” in this article to avoid confusing laypeople. ↩︎
13. The video was posted in March 2025. The source to the YouTube page includes the metadata: “itemprop=”datePublished” content=”2025-03-09T10:00:25-07:00″. ↩︎
14. This reflects case law. Five months earlier, the Mudan case had confirmed that the scope of the uninhabitable exemption is very limited (and this was then upheld by the Court of Appeal in June 2025). ↩︎
15. Mudan is clear that you can’t form a judgment based on a “snapshot”. ↩︎
16. It’s not new. Direct recovery of debts came into force in 2015, was paused as a result of Covid, and resumed in 2025. ↩︎
6 January 2026
Gibraltar Corporate Partners: it’s Offshore Advisory Group, rebranded
Back in June we reported on perhaps the strangest firm we’ve come across – “Offshore Advisory Group”.

Offshore Advisory Group recently rebranded as Gibraltar Corporate Partners.

Offshore Advisory Group promoted itself by pushing extreme political commentary, including conspiracy theories originating in Russian propaganda outlets. It used the attention this attracted to sell a tax avoidance scheme that supposedly let UK businesses escape UK tax by incorporating in Gibraltar. We obtained copies of a structure paper prepared by Offshore Advisory Group – it made a series of fundamental errors, and proposed a structure that simply didn’t work.

Offshore Advisory Group’s response to this, on its official LinkedIn, was rather unusual:

That was widely criticised; OAG responded by deleting the post, and then posting another accusing every accountant and tax adviser in the UK of “acting out of self-interest”.

Following the adverse publicity, Offshore Advisory Group appears to have changed its name to Gibraltar Corporate Partners. The Offshore Advisory Group website redirects to a new Gibraltar Corporate Partners website, with most of the old content removed, but the same false claims that businesses can avoid tax by moving their invoicing entity to Gibraltar:

The Offshore Advisory Group LinkedIn account was renamed to Gibraltar Corporate Partners, with all the old content still there and still referring to the old name (the original post was deleted soon after we posted this article). The same people seem to be involved. They’ve responded in the comments below¹, denying that they promote or advise on tax schemes (which is odd, given that their website and structure paper show that they do promote and advise and tax schemes ).

Given their history, we would strongly advise against dealing with Gibraltar Corporate Partners. Our general recommendation has always been that, whether for looking advice in the UK or abroad: only ever deal with regulated firms.

Many thanks to John Holt for spotting the change of name.
Footnotes
1. We’ve confirmed by email that the comments are genuinely from GCP/OAG. ↩︎
30 December 2025
The mansion tax map: where the money comes from
We’ve modelled the impact of the English “mansion tax“¹ by analysing land registry data on every property transaction since 1995. This lets us estimate how much each postcode and Parliamentary constituency will pay. It’s an approximate and lower-bound estimate – see methodology details below. As property taxes are devolved, there’s currently no mansion tax in Wales and Scotland – although I rather expect there will be soon.

This interactive map shows the results of our model, marking every postcode that contains “mansion tax” properties. It also shows English and Welsh data² on the current council tax bands, median house prices, and the changes in house prices since 1995 (which demonstrate quite how out of date council tax is):³

Your browser can’t display this interactive content. <a href="https://taxpolicy.org.uk/wp-content/assets/council_tax_data/" target="_blank" rel="noopener noreferrer">View it in a new tab</a>.

You can view the map fullscreen here. It’s important to stress that this is only showing postcodes – the markers on the map are at the centre⁴ of the postcode and do not represent individual properties.

This chart shows our estimate of the revenue from the mansion tax for each constituency. You’ll be unsurprised to see that most affected properties are in London (you can move the mouse over individual constituencies to see full details).

My view is that the tax is good policy. There will be inefficiencies and unfairnesses, as with all taxes, but the basic concept is right: ending the anomaly that someone in a £10m home pays the same council tax as someone in a £1m home – and only twice the council tax of someone in a £400k home. I wrote more about my views here.

This chart shows how the “mansion tax” makes council tax somewhat more progressive:

Methodology and limitations

Our methodology was straightforward: use the Land Registry price paid database to find every property transaction since 1995 that looks residential⁵, and uprate prices by the change in median house prices in each constituency (whilst also displaying council tax data).

The code for the analysis and webapp is available on our GitHub.

It would be technically straightforward for our analysis and map to show the estimated value and mansion tax for individual properties, but we were uncomfortable with the privacy implications (although there are many property price websites that let you see “price paid” data for specific properties). We therefore limit the map to postcodes (which has the side benefit of making the app load and respond much faster).

Our very simple approach has obvious limitations:
- The open Land Registry data doesn’t include title numbers or other identifiers for properties. So we have to “de-duplicate” repeated transactions in the same property, so we only count the most recent. This is error-prone and we err on the side of conservatism – we’ll therefore be missing some properties.
- The open Land Registry data also doesn’t differentiate between residential and commercial. We use the “Property Type” field which says whether a property is detached, semi-detached, terraced, flat/maisonette or “other”. In principle, “other” should be commercial property and the other types should be residential – but there will be numerous cases where this isn’t so. For example a farmhouse sold with the farm may be classified as “detached” and so caught in our data as if the full price related to the house, when realistically it won’t.
- Inflation is higher in some areas within a constituency than others
- We can’t take account of improvements etc to properties, conversions (e.g. where a property is split into flats), and any other changes after a sale.
- Our approach completely ignores properties that haven’t been sold since 1995.
- In some cases (particularly high value property) the price is hidden, or too low.
- Portfolio transactions are another problem – e.g. where multiple low value properties are acquired for a large £2m+ price, but no separate price is registered for each property. In that case the land registry sees each property as a £2m+ sale, and we end up with multiple false identification of “mansions”. We try to fix this by identifying when there are multiple purchases on the same postcode on the same date for the same price – but this won’t catch all such cases (e.g. where a portfolio transaction spans multiple postcodes). There isn’t an easy way to fix this.
Taken together, our approach is likely generating a lower-bound estimate of the actual static revenue from the tax. The total estimated revenue is £510m.⁶

This is much less than the OBR’s static revenue estimate of £600m – that will be because they used more sophisticated approaches, for example more granular house price inflation corrections, better detection of residential property, inclusion of properties that aren’t in the transaction data. The OBR then adjusts the static estimate to reflect behavioural effects (clustering below thresholds) and losses to other taxes – this brings their total estimated revenue to £400m.

So our figures, and our map, are missing properties and undervaluing properties, and that together amounts to an error of about 20%. We make no attempt to adjust for behavioural effects. So none of the figures we present will be individually accurate, but the overall picture should be an accurate reflection of the constituencies and postcodes from where the “mansion tax” revenues will come.

Contains HM Land Registry data © Crown copyright and database right 2025. This data is licensed under the Open Government Licence v3.0.
Footnotes
1. Strictly the “high value council tax surcharge” or HVCTS. ↩︎
2. Unfortunately it’s limited to England and Wales – the Scottish data is separate. ↩︎
3. Much worse in England than Wales, because England is still on the original 1991 valuations, but Wales revalued council tax in 2003. There was a huge amount of house price inflation in the 1990s. ↩︎
4. Strictly it’s the address-weighted centre, not the geometric centre. ↩︎
5. i.e. labelled as detached, semi-detached, terraced or flat/maisonette. Almost all of those are residential. Some of the other category (“Other”) will also be residential, but we’ve no way to screen those using only land registry data – typically one would use a commercial database to cross-check. Government/local authorities can of course use council tax/business rate records. ↩︎
6. The original version of this article said £400m. We’ve since improved the algorithm; it’s better at removing repeated transactions in the same property (i.e. because we only want to take the most recent). It’s also now using change in median detached house prices per constituency, rather than change in all median house prices. Detached houses are likely a better proxy for change in value of very expensive homes. ↩︎
27 November 2025
The Budget – what it says
Here’s our summary of the Budget and a quick take on what the various measures are likely to mean.

(The first draft of this article appeared unusually early, thanks to the OBR accidentally publishing their assessment of the Budget about half an hour before the Chancellor started her speech.)

Key elements

It’s all about fiscal creep:

The overall impact is one of the largest medium-term tax rises in recent years – £30 billion a year by 2030/31:

Three measures do most of the work.

First, that “fiscal creep”. Since 2018, successive Chancellors have let tax thresholds become eroded by inflation. The IFS said in 2023 that this was the largest single tax-raising measure since 1979, but after two years’ of further creeping, the OBR’s latest estimate is that fiscal creep will raise £32bn in 2026/27 and £39bn in 2029/30. This is likely the largest overall tax increase from a single policy in the post-war period.¹

This means median earners have been paying a bit more tax (but less than before the personal allowance was cut in 2011), and many more people have become higher rate taxpayers (paying quite a bit more tax):

Second, salary sacrifice is being capped to £2,000. We may see this exacerbate the “bumps” in the income distribution, where people can currently use salary sacrifice to stay under thresholds that result in high marginal rates:

Third, a slight surprise: an increase in income tax on investment income – property, savings and dividends. The political attraction is obvious, and the Chancellor sensibly didn’t put up the top (additional) rate of dividend tax. That’s probably because UK dividend tax is already one of highest in the world. Look at the top of the arrow tails on this chart:

There’s a nice infographic in the Budget documents showing how the different rates of basic rate income tax now look:

Basic rate dividend tax is therefore (taking corporation tax into account) no at the “right” rate – and additional rate dividend tax already was.

All these measures are back-loaded:

Fourth, a significant HMRC compliance package, which the OBR seems to accept will materially reduce the tax gap:

Fifth, a council tax surcharge:

My immediate reaction is that it’s fair that expensive houses pay more council tax. The current system is inequitable – a tax that looks like this can’t be defended:

It would have been much better to revalue council tax and add more bands. Given that is seen as politically too hard, the Government instead created a new tax working off a fresh valuation basis:

The oddity is the limited number of bands. That probably makes valuation easier, but means there is a sharp discontinuity at the boundaries (and so lots of appeals around the £2m point) and that £100m properties don’t pay more than £5m properties. So the curve created by the new tax is an improvement, but still looks a bit odd:

Economists usually assume that an annual property tax is “capitalised” into prices – buyers factor in the future stream of payments. On that basis, a £7,500 annual charge cuts the value of a £5m property by perhaps £200k to £300k, i.e. 4-6%. However that’s if people are rational calculating machines – obviously they are not. Stamp duty on a £2m property is £150k; on a £5m property it’s £500k. These ridiculous numbers are why stamp duty should be abolished and replaced with an annual property tax. But their sheer size means buyers may not regard the prospect of £2,500 to £7,500 annual taxes with enormous trepidation.

The tax will apply from April 2028. It will be collected by local authorities (together with council tax), with the revenue going to central Government, and central Government compensating local authorities for the admin cost.

The tax doesn’t raise much – £400m. That was the correct decision. A “proper” percentage mansion tax would have had a much more serious impact on the property market. It would also have been unfair to people who happen to own property today, as they would have taken the hit (with the economic effect rather like one-off tax on property wealth). We absolutely should have a proper percentage-based property tax, but that has to be part of wholesale reform, meaning abolishing stamp duty. Having both would be inequitable, and do damage to an already very troubled property market.

Sixth, what is I think a sensible introduction of a mileage tax for electric cars:

There’s a consultation document – the tax will be a new kind of tax for the UK, and that always takes time to design and build. Perhaps sugaring the pill, a consultation on allowing EV charging to be installed across pavements (safely) without planning permission.

Seventh, a reduction in capital gains tax relief for disposals to employee ownership trusts. This was a measure intended to encourage employee ownership. It has been abused in some quarters – and costs much more than originally anticipated.

Eighth, a reduction in writing-down allowances, which allow businesses to claim tax relief when they buy capital items. There’s “full expensing” (immediate complete tax deduction) for plant and machinery, but some items don’t qualify, and must be written off over time (perhaps the most important example is second-hand/used plant and machinery). This change slows down the rate. It will therefore (at the margin) reduce investment in such items.

The final big item is, as widely expected, an increase in gambling tax:

Then some smaller measures:
- Closing the loophole that meant that some taxi firms (think: Uber) paid a lot less VAT than they should. This will be portrayed as a “taxi tax” but it’s really just fairness and common-sense – all taxies should have the same VAT rules.
- As expected, closing “low value consignment relief”, which exempts imports of £135 or less from customs duties. The intention was always to avoid disproportionate duty and administration charges. The problem is that the relief has essentially been weaponised by the likes of Shein, making UK retailers uncompetitive.
- The expected expansion of the higher air passenger duty for private jets, to include large private jets as well as smaller ones.
- The Energy Profits Levy (or “windfall tax”) to remain in place until at least March 2030. I expect it will in reality become a permanent feature of the tax system.
- A consultation on letting elected mayors introduce tourist taxes. The question is how much they will adversely impact the already-under-pressure hospitality sector. Will be writing more about that soon. The (obvious) lesson of the council tax second home surcharge is that local authorities are so strapped for cash that they will maximise any opportunity they have to make additional revenue, regardless of the merits of the tax.
- Changes to the sugar levy, intended to reduce the amount of sugar in drinks – it’s not immediately clear if this will raise additional revenue.
The overall result: by the end of the decade, the UK tax take hits 38% of GDP – the OBR says that is an “all time high”.

Tax cuts

There were a few:
- A temporary three year holiday from SDRT/stamp duty on shares for new listed companie. No details yet. It’s good to see focus on this – stamp duty is a damaging tax, and higher than the similar taxes imposed by comparable countries. But I’m sceptical it will be effective. Investors and companies look further out than a few years.
- As announced in last year’s Budget, a reduction in business rates for retail, hospitality and leisure businesss, paid for by an increase in business rates for businesses with larger properties (including, but not limited to, the warehouses used by the likes of Amazon).
The Budgets we were never going to see

Quite a lot of complaints are from people expecting Budgets we were never realistically going to see. Three types in particular:

A Budget that cuts spending.

The Spending Review was in June and it seems unlikely any of those decisions will be re-opened. The attempt to find £5bn of welfare savings was a failure, with Labour MPs and much of the public opposed. Whilst many politicians are in favour of generic spending cuts and “efficiency savings”, it’s much rarer to find anyone active in politics (as opposed to think tanks) committed to a specific programme to constrain or even shrink the size of the state.

A Budget that raises income tax

The kind of Budget I and other tax wonks and economists would prefer: where any immediate “black hole” and need for fiscal headroom was resolved with transparent increase in income tax. Every economist I’ve spoken to, Left or Right, believes this would be the least damaging tax increase.

But it is also one of the least popular.

So it’s hardly a surprise that’s not what we saw.

A Budget that introduces totemic taxes on the wealthy

The “wealth tax” (meaning a percentage tax on assets of the wealthy) is very popular, particularly in a three-second conversation. When, however, there is a need for revenue to finance current spending, a tax that will likely raise nothing before 2029 is not an attractive option (quite aside from the many serious practical and technical problems with the tax).

We will not see a wealth tax under this or probably any other conceivable government.

Thanks to Beth Rigby at Sky News.
Footnotes
1. There have certainly been Budgets raising more than this; but no single policy has raised anything like as much. ↩︎
26 November 2025
The Budget small print: six key reforms to watch
Most of the attention during and after the Budget will be on the big tax-raising measures. But there are an unusual number of important other items, which appear technical, but will impact everyone from billionaire non-doms to the poorest people in the country. None of these items are likely to be mentioned in the Budget speech, but will be buried somewhere in the mountains of paper that accompanies it.

We’ll be watching for these six:

1. Keeping more non-doms 2. Solving the small company tax gap mystery 3. Promoters of tax avoidance 4. Umbrella companies 5. HMRC penalties: the impact on the poor 6. Loan charge review

1. Keeping more non-doms

This could be the Budget measure with the greatest long-term impact.

Jeremy Hunt made the decision to move from domicile to a modern residence-based regime (something we and many others had suggested). Labour took that, and made the additional and politically irresistible promise to close the “trust loophole“.

But there’s a problem. The original Hunt changes ignored a key point: that inheritance tax shapes decision-making by non-doms (and indeed many others) far more than taxes on income and capital gains. Hunt’s reforms had inheritance tax applying in full, at the normal 40% rate, once a non-dom had been resident in the UK for ten years. For many non-doms, paying a bit more UK tax on their dividends and capital gains is not a big deal. But the prospect they could fall under a bus, and then their children would lose 40% of their worldwide assets in UK tax, is a very big deal indeed.

That wasn’t a terribly big point back when Hunt made his proposal, because the – very deliberate – “loophole” meant that the seriously wealthy would keep their non-UK assets in trusts and so avoid inheritance tax.

By abolishing the loophole, Labour made the “bus” problem something that couldn’t be avoided. The OBR estimated that 25% of the wealthier non-doms – those with trusts – would leave the UK. This is why.

Fortunately it’s not too late. Despite some media reports, informed observers generally believe no more than 5-10% of non-doms have left so far.

There’s a great summary of the changes from law firm Macfarlanes.

Points to watch: Will the Budget revisit any of the detail of the non-dom reforms? In particular, will there be a new, gentler, application of inheritance tax, for example gradually applying in stages from year ten to year twenty, rather than applying immediately in year ten?

2. Solving the small company tax gap mystery

40% of all corporation tax due from small businesses is now not being paid:¹

That sharp uptick in 2019/20 may have initially been caused by the pandemic, but we don’t see that effect for other types of taxpayer, and it’s now clear that the trend didn’t slow down after the pandemic.² Part of the changes appears to be due to a change in methodology, but most is not.³

There’s a sharp contrast with the large and mid-sized business corporation tax gap, which HMRC have been remarkably successful at closing.

The trend isn’t confined to corporation tax – the overall small business tax gap has also ballooned:⁴

These effects mean the small business tax gap is now at least £10bn/year higher than it should be.⁵ The surprising thing is that nobody seems to know why this is – not the team who work on the tax gap calculations, and not HMRC or HMT policy experts. There are several theories – in our view the most plausible is that the trend is driven by avoidance, evasion and non-payment which is technically classified as “small business”, but is really just individuals using companies to avoid/evade tax.

Points to watch: will there be recognition that this is an issue, and an announcement that Government will task HMRC with identifying whether the £10bn represents a real loss and, if so, what should be done to collect it?

3. Promoters of tax avoidance

Many of our investigations have concerned what are often called “tax avoidance schemes”, but which are in reality often little more than scams. The schemes usually have no real technical basis, the promoters usually have no tax expertise, and either HMRC loses out or the clients/victims are frequently left with large tax liabilities (or, quite often, both).

HMRC’s official “tax gap” figures show tax avoidance costing HMRC £700m in lost revenue. I and many other observers (within and outside HMRC) believe this understates the problem, because much “avoidance” isn’t properly avoidance at all, and ends up classified by HMRC as evasion or non-payment. Some of the “missing” £10bn of small business tax is likely caused by these schemes.

The Government published a series of detailed proposals in a consultation back in July – “closing in on promoters of marketed tax avoidance”, creating a range of new civil and criminal powers for HMRC. Most importantly, HMRC will be able to charge large penalties to promoters who fail to disclose tax avoidance schemes to HMRC, and Treasury Ministers will be able to make regulations which, once approved by Parliament, will create a “Universal Stop Notice” making promoting a specified scheme a criminal offence.

The package has been highly controversial in the tax advisory world, with many advisers expressing concerns that innocent (which is to say, non-fraudulent) advisers could end up liable. I am sympathetic to some of these concerns, but others I think are overdone. I hope we’ll see finalised proposals which strike the right balance.

Points to watch: will the key “Universal Stop Notice” and penalty measures be included? Will there be new protections for bona fide advisers?

4. Umbrella companies

Millions of people in the UK work are employed by employment agencies for temporary work. That includes NHS nurses, IT contractors, and often low-paid staff such as warehouse workers. But modern practice is that the biggest employment agencies don’t actually employ anyone. They act as middle-men between end-users (like the NHS or Tesco) and “umbrella companies”, which actually hire the workers. When an end-user asks the employment agency to provide a worker, the employment agency then goes out to umbrella companies and asks them to bid to supply the worker (in a process that is, inevitably, now entirely automated).

This creates a dangerous incentive. In a country with a minimum wage, umbrella companies should have little ability to compete on price (other than bidding down their own profits). But if they can find a way to reduce the PAYE income tax, national insurance and employer national insurance on their workers’ remuneration, they can bid less, and win the contract.

We have therefore seen a huge number of schemes run by umbrella companies to not pay the tax that is usually due. Our team hasn’t seen a single such scheme which has any legal merit. Some have involved simple fraud – just stealing the PAYE instead of giving it to HMRC. More usually the schemes are dressed up as tax avoidance schemes, with the worker supposedly paid in some bizarre manner (such as via an option over an annuity) that avoids tax. In our view these “avoidance” schemes are in reality also fraud, because the legal positions taken are unsupportable. And in almost all cases when HMRC challenges an umbrella company, it’s abandoned by the shadowy figures running the scheme, goes into administration and the tax is never paid.

The scale of the schemes can be seen by looking at HMRC’s list of named avoidance schemes – almost all are umbrella/remuneration schemes. We’ve spoken to informed sources within the agency/remuneration world who believe that several billion pounds of tax is being lost every year.

Draft rules were published in July which make employment agencies jointly liable for tax defaults by umbrella companies. The idea is a sound one: create an incentive for agencies to police the umbrella companies they work with. The problem is that the proposals create another incentive for bad actors: instead of just controlling umbrella companies, acquire/create recruitment agencies. Then, when HMRC attacks schemes, the recruitment agency will be abandoned, leaving HMRC with no way to collect the tax.

The answer is a draconian one: put responsibility on the end-user – the company actually hiring the worker. Tesco or the NHS in our example above. I’d then expect end-users to put very robust measures in place to ensure the tax is paid (for example paying the tax amount into an escrow account so the agency/umbrella can’t touch it).

Points to watch: Will the measures go ahead? And if they do, will liability be limited to agencies and not the end-users? If the measures are enacted without end-user liability then I expect in practice they will have only a limited effect.

5. HMRC penalties: the impact on the poor

Over the past five years, HMRC have issued around 600,000 late-filing penalties to people whose incomes are too low to owe any income tax at all.⁶ Far more penalties were issued to people too poor to pay tax than to those in the top income deciles:

This is not a niche edge-case: it is baked into the design of the current regime. Since a 2011 reform, late filing penalties are no longer capped by the tax actually due – so a person who ultimately turns out to owe nothing still keeps the penalties.⁷ Many low-income taxpayers are brought into self assessment by HMRC error, historic earnings, or very small amounts of self-employment income – over £1,000 a year is enough to trigger the filing requirement⁸

Things should, in principle, improve – the current penalty rules are being replaced with a new “points-based” penalty regime under which nobody is fined for a first missed deadline and total late-filing penalties are capped at £200.⁹ But the penalty reforms are part of the Making Tax Digital project, requiring businesses and the self-employed to keep digital records and submit tax information to HMRC electronically. That means the changes will only apply to those with incomes over £50,000 from April 2026, over £30,000 from April 2027, and over £20,000 from April 2028 – and there is currently no timetable at all for anyone below that.¹⁰ The Low Incomes Tax Reform Group has described the result as a “two-tier system” in which those on the lowest incomes are left with the old, harsher rules.

This means that, for the foreseeable future, a millionaire landlord filing his tax return late won’t pay a penalty; but his low-income tenant will continue to pay up to £1,600. That’s indefensible, and something no Labour Chancellor should stand for.

Points to watch: Fixing this, and stopping charging penalties to the poorest in our society, would only cost £6m. There are few tax reforms that are this good value for money. Will we see any change?

6. Loan charge review

The 2000s and early 2010s saw widespread marketing of tax avoidance schemes which disguised pay/remuneration as “loans”. The idea was that, instead of being paid in the usual way (and paying tax) you received loans from an offshore trust (and paid no tax). I put the word “loans” in quotes because they weren’t really loans at all – in most cases there was never any intention to repay them.

HMRC failed to effectively challenge the schemes, and by 2019 there were over 50,000 people using them, and lost tax running to billions each year. There was no way to launch 50,000 separate enquiries, and so in 2016 the Government enacted the “loan charge” – a one-off charge on scheme users which retrospectively undid the benefit of the schemes. We discussed more of the background here.

This has caused considerable hardship. The promoters selling the schemes cared only about their fees, and never told their clients about the risks they were running. So the taxpayers generally spent the tax they were saving. Worse, a high percentage of the tax saving went in fees to the promoters – so recovering the full tax amount now means that taxpayers are being asked to repay amounts that never went into their pocket.

The loan charge has become mired in controversy, with lobbyists often denying that the schemes were avoidance, and seeking for affected taxpayers to escape without ever repaying the tax they avoided. That’s not justifiable.

The new independent review was announced at Autumn Budget 2024 and formally commissioned in January 2025, led by Ray McCann – a widely respected retired senior HMRC official who went on to work in private practice and was President of the Chartered Institute of Taxation.

The outcome of the review will be published with the Budget papers.

Points to watch: a sensible outcome would be to distinguish between the actual cash tax savings made by the scheme users, and the large fees they paid to promoters. The loan charge should only recover the former. Any excess already paid by taxpayers should be refunded. It would also be good to see new measures against promoters, for example giving the scheme users a right to recover their losses.

Photo by Joshua Hoehne on Unsplash
Footnotes
1. The source is the HMRC tax gap tables – see tables 5.2, 5.4 and 5.5. ↩︎
2. The only other taxes where the tax gap has gone up over this period are inheritance tax (which likely results from so many more estates becoming subject to the tax) and landfill tax (we don’t know why that is; it’s an area where our team has no knowledge or expertise) ↩︎
3. There have been a series of upward statistical revisions to data for recent years. These took the 2022/23 small business corporation tax gap from 32% to 40% (with the 2021/22, 2022/23 and 2023/24 figures being essentially identical). However HMRC sources have confirmed to us that these revisions don’t call earlier figures into question, and so the apparent trend in the data is real, and not just a statistical artefact. ↩︎
4. This is from table 1.4 of the HMRC tax gap tables. HMRC have generally done an excellent job shrinking the tax gap, with declines across the board. But after 2017/18 something changed. ↩︎
5. The small business tax gap increased from 2.4% of all UK tax revenues in 2005/6 to 3.2% in 2023/24. The rest of the tax gap fell precipitously over that period – large businesses from 1.7% to 0.7%; mid-sized businesses from 1.0% to 0.5%. ↩︎
6. See HMRC’s FOI response. An interactive breakdown of the data, and the code used to analyse it, is available here. The underlying calculations are on our GitHub. ↩︎
7. The modern regime is contained in Schedule 55 to the Finance Act 2009, brought fully into effect for self assessment from 2011/12. Under the previous system, broadly, a late filing penalty could be capped by the tax shown as due on the return (for example under s93 Taxes Management Act 1970), so someone with no liability would not normally end up with substantial penalties once they filed. The Low Incomes Tax Reform Group (LITRG) warned at consultation stage that removing the linkage to tax due would risk “wholly disproportionate penalties” for those with low or no incomes: see their response to HMRC’s 2008 penalties consultation, especially para 4.4.1, reproduced at page 5 of LITRG’s later paper, “Self assessment – a position paper”. ↩︎
8. See the gov.uk guidance on who must file a tax return. In practice, people can also be kept in self assessment long after their circumstances change unless they (or an adviser) tell HMRC they should be removed: see LITRG guidance and HMRC pages on leaving self assessment. Once HMRC’s computer has issued the notice to file, the penalties roll out automatically if nothing is sent back. ↩︎
9. The new late submission regime is described in HMRC’s guidance note “Penalties for late submission”. In outline, taxpayers accrue “points” for missed filing obligations; once a threshold is reached, a £200 penalty is charged, but there is no further escalation into the thousands. Points expire after a sustained period of compliance. The rules are legislated mainly through amendments to Schedule 55 FA 2009, alongside the wider Making Tax Digital (MTD) programme. ↩︎
10. See the government’s technical note on the phased implementation of MTD for income tax, and the announcement of revised timings. ↩︎
26 November 2025
Has council tax really gone up? The evidence.
Council tax is unpopular, not least to a perception that it’s relentlessly going up. But is that true? If we take inflation out of the numbers, and express everything in today’s money, has council tax actually gone up?

Did council tax bills go up?

Here’s the average Band D council tax for England, Wales and Scotland:

English council tax has doubled. Welsh council tax has gone up more than three times. Scottish council tax is largely unchanged.

We should, however, be careful when using the “average Band D” figure. That’s the official statistic, because Band D is the “benchmark” from which the other bands are calculated – but that doesn’t mean Band D reflects the average council tax. The mix of bands varies by local authority (thanks to the hopelessly out of date 1991 valuation basis). The raw “Band D” figure also ignores council tax support (a locally-managed discount for people on low incomes).

So if you are a household that pays council tax, without support, then the chart is probably a good guide to what you’ve actually experienced.

If we want a more general view, we can use the ONS figures for council tax receipts, and divide that by the ONS data for number of households. This gives us a measure of average council tax per household, across the UK:

We see a similar picture, with average council tax doubling.

Why did council tax increase?

Two reasons.

First, because central government funding declined. This chart from the IFS shows total council funding per capita in real terms (the blue line):

Second, because demographic change meant that the demand for social care greatly increased over this period. Councils are required by statute to provide this – so other services were cut:¹

So the ultimate answer is that local taxation has increased because councils have been required to take on the burgeoning cost of social care, and at the same time central Government funding has reduced. That’s in the wider context of overall taxation increasing, but the income tax and national insurance burden on the average worker having fallen. Probably fair to say that council tax rising is a consequence of tax not rising (for most people).

Photo by Tanya Barrow on Unsplash
Footnotes
1. Data is from Table 1 in this IFS report, Real-terms spending per person by service area, various years (2024–25 prices). ↩︎
24 November 2025
Betting on tax avoidance – is Sky Bet avoiding £55m tax per year?
ITV News has just broadcast an investigation: gambling company Sky Bet has migrated its business to Malta to avoid around £55m of tax each year. We provided technical support for the investigation, and this report goes into further detail of what precisely Sky Bet has done.

Sky Bet provides a vague explanation of why they moved to Malta (“a number of strategic and commercial reasons”), but this is untrue: they moved to Malta to avoid UK tax. This report sets out the details of what Sky Bet is doing, how much tax it will save, and whether (and how) HMRC should be trying to stop it. And we propose a way to reform gambling taxation so that businesses like Sky Bet no longer have an incentive to move offshore, and those that have moved offshore could have an incentive to return.

Sky Bet

Sky Bet is a gaming company. It was part of Sky plc (the media group) but since 2018 has been owned by Flutter Entertainment, an Irish company that’s probably the world’s largest internet gambling business.¹ The rights to the Sky Bet sporting business used to be held by a UK company, Hestview Limited.²

Looking at Hestview’s 2024 accounts, the company’s tax position looked broadly like this:
- Sky Bet paid general betting duty on its “net stake receipts” (broadly speaking, receipts from gamblers minus payouts). The rate is 15% (fixed odds/totalisator) and 10% for spread bets. Let’s assume (for the sake of this example) the average for Sky Bet is 13%. So on Sky Bet’s £580m³ of net stake receipts it paid £75m.
- After other expenses, Sky Bet’s profit was £156m, on which it paid corporation tax at 25% – £39m
- Hestview also had a £132m marketing budget – this will include advertising and sponsorship (including its £15m/year sponsorship of the English Football League). The advertisers and sponsors would charge Sky Bet UK VAT at 20% – costing Sky Bet £22m in VAT.⁴
So Sky Bet’s total tax bill is about £136m (ignoring employee tax and second/third order effects).

Sky Bet’s owner, Flutter, at some point decided it wanted to reduce its tax bill – and this is why Hestview’s 2024 accounts say they decided to move to Malta:

But it looks like there was a last-minute change of mind.⁵ Instead of setting up a Maltese company, Sky Bet set up a UK company, SBG Sports Limited ⁶, with a Maltese branch (this is clear from documents filed with the Maltese company registry).⁷

It’s not just a brass plate on an office building, but an actual headquarters, with its senior staff all physically now based in Malta.⁸ ⁹
- SBG Sports Limited would need a licence from the Gambling Commission. It obtained one in October. It’s unclear if the Gambling Commission knew SBG Sports Limited would actually have most of its operations in Malta.
- The c£75m of general betting duty still applies – since 2014, betting duty has applied on all betting by UK customers, regardless of where the supplier is.
- SBG Sports Limited is subject to UK corporation tax on its profits, but can elect to be exempt from tax on the profits of its Maltese branch. Those Maltese profits would then be subject to Maltese corporate income tax, not UK tax. Malta has a 35% corporate tax rate – so it looks like they’d pay more than in the UK. The reality is very different.¹⁰ For international companies the rate isn’t really 35% at all – if the profit is paid as a dividend to a holding company shareholder, it receives a refund of 30%.¹¹ The actual rate is 5%. That means instead of paying £39m of corporation tax, Sky Bet would be paying £8m.¹² The “flexibility” of Maltese tax rules mean in practice they could pay much less.¹³
- UK advertisers and sponsored businesses no longer add UK VAT to their invoices to SBG Sports Ltd in Malta. Instead, SBG Sports will “reverse charge” Maltese VAT (because VAT in this case applies in the location of the purchaser, Sky Bet). SBG won’t be able to recover that VAT. The rate is 18% – so (assuming the marketing budget is still £132m), VAT costs Sky Bet £24m.
On the face of it, the total tax bill is now £107m. The relocation to Malta has saved at least £29m of tax.

That may, however, be just the start. Sources in the gaming industry tell us some people are going further and avoiding the VAT bill as well – and it’s being promoted by Maltese advisers.

Our hypothesis is that Sky Bet is doing something like this:
- Instead of SBG Sports Limited buying the advertising/sponsorship, it set up a new company (“ServiceCo”), perhaps in Belgium, Luxembourg or Ireland.
- ServiceCo says its business is managing Sky Bet’s advertising. So it registers for VAT in Belgium/Luxembourg/Ireland.¹⁴ There are actual people there, and they really do manage the advertising. SBG Sports Limited pays ServiceCo a commercial fee for doing this.
- ServiceCo buys advertising and sponsorship – in theory there’s Belgium/Luxembourg/Irish VAT on this. But, because ServiceCo claims to be an advertising business, it can recover this VAT. ServiceCo therefore has no VAT cost.
- ServiceCo then supplies the advertising on to SBG Sports Limited’s Malta branch. There are various ways to do this without triggering additional VAT – most likely ServiceCo sets up a branch¹⁵ in Malta which joins a VAT group with SBG Sports Limited’s Maltese branch. Thanks to a very handy legal interpretation by the Maltese authorities, the whole of ServiceCo (the branch and Belgian/Luxembourg/Ireland HQ) and the whole of SBG Sports Limited (the UK headquarters and the Maltese branch) become part of the VAT group.¹⁶ This means the advertising/sponsorship bought by ServiceCo is now on-sold by ServiceCo to SBG Sports Limited as an “intra-group supply”, and completely outside VAT.
The structure looks something like this:

We asked Sky Bet specifically to confirm or deny that it was taking steps to eliminate its VAT charge; we received a generic statement which declined to comment on the specifics. It’s therefore our working assumption that Sky Bet is avoiding that £24m of Maltese VAT. On that basis, the relocation is now saving £55m or more of tax every year.

Our team of experienced advisers would not have advised a client to adopt this structure; it is aggressive and likely susceptible to both HMRC challenge and/or change of law. The following sections consider how such challenges and changes could be made.

What can HMRC do to recover the corporate tax?

The starting point is that, under current law, if a business genuinely relocates to another country then it no longer pays UK tax on its profits.¹⁷

There are, however, important points of detail that we would expect HMRC to consider:
- Usually if a business moves from a UK company to a foreign company there will be an immediate capital gains tax charge based on the increase in value of the business and its assets. Hestview Limited was in business for many years so we’d generally expect there to be a large “latent” capital gain. Probably for this reason, the snippet from the accounts above says that an IP licence was granted (as opposed to a sale of the business/IP). So what we expect is happening is that Hestview Limited is retaining ownership of the intellectual property that drives the business, but licensing it to SBG Sports Limited.¹⁸ That would be in exchange for a licence fee which would be subject to UK tax. The UK’s “transfer pricing” rules require that such a fee is on arm’s length terms – we expect HMRC would seek to argue that the licence fee should be a very significant percentage of SBG Sports’ foreign profits. That, however, would undo the corporation tax saving – so likely either SBG Sports has some more sophisticated structuring in place¹⁹, or will run arguments to minimise the licence fee.²⁰
- We understand that the senior staff of Hestview really have moved to Malta. However a large number of other employees remain in the UK. We would expect HMRC to consider whether an adequate amount of profit is being allocated to the UK business.²¹
- It’s not uncommon for structures to be carefully designed on paper, but then the actual implementation to fall short. So, for example, if SBG Sports’ key decision-makers decide they are bored in Malta, and spend more and more time in the UK, then it may be that more of SBG Sports Ltd’s profits become attributed to the UK.²²
Which is a long way of saying that a genuine relocation to Malta which still pays arm’s length (and probably very high) IP royalties to Hestview in the UK will be hard for HMRC to challenge – but such a structure would also present only limited tax savings for Sky Bet. A structure which aggressively tries to minimise the royalties paid to the UK would be more financially attractive for Sky Bet – but greatly increases the prospect of a successful challenge.

What can HMRC do to stop the VAT avoidance?

It’s important to note that we do not know if Sky Bet is using the VAT avoidance structure outlined above – this is our speculation (which Sky Bet pointedly did not deny). However we are reasonably certain that at least one other group is currently using a structure of this kind.

The EU and UK VAT systems are not supposed to enable businesses to magically make their VAT cost disappear. It is entirely proper for the UK to find any way it can to block this kind of structuring, either under current law or by changing the law.

Under current law, we’d expect HMRC to investigate whether the advertising services supplied to entities like ServiceCo are really being supplied to Belgium/Luxembourg/Ireland, or to a “fixed establishment” in the UK. This again will in large part come down to how carefully the structure is implemented.

Recent history has been that HMRC has failed to successfully challenge this kind of avoidance. VAT is a creation of EU law, and EU law has only enabled tax authorities to attack the most highly artificial types of VAT avoidance. So, for example, the UK Government passed legislation in 2019 aimed at stopping “offshore looping” by insurance brokers – routing arrangements through an offshore company to avoid VAT. That’s fairly close to the structuring we believe Sky Bet may have used. A tax tribunal recently held in the Hastings case that the 2019 legislation was contrary to EU law, resulting in a £16m VAT refund for Hastings.²³

The upshot is that, as one adviser told us – “VAT avoidance is okay even if ‘blatant’ – as long as you do it right”. This should change. There’s no reason, post-Brexit, that UK VAT rules should accept that “blatant” VAT avoidance is “okay”. The Government should legislate:
- overriding those features of EU law which facilitate VAT avoidance (and make this retrospective, preventing further claims based on Hastings), and
- enabling HMRC to require UK businesses invoicing offshore companies to apply UK VAT in cases where HMRC can identify that abuse has taken place. The offshore company could then claim a refund to the extent that foreign VAT is actually paid.
Is it lawful?

It is common for reporting on corporate tax avoidance to say that there is no suggestion that tax planning is unlawful. That is not necessarily the case here.

There appears to have been an element of concealment in how Sky Bet/Flutter has described the arrangement. The public version is that the relocation to Malta is being executed for “strategic reasons” (and more on that below). Sky Bet’s staff weren’t told that tax was a factor. However, ITV’s source at Flutter is clear that tax was in fact the real motivation:

“Tax was the elephant in the room. It was absolutely understood, across everyone affected, indirectly affected or even aware of it… that this was about tax.“

Our industry sources, and our panel of experienced tax experts, believe that this is likely correct.

If Sky Bet told HMRC that the arrangement wasn’t driven by tax, but it in fact was, then that was improper and potentially unlawful.

Ending offshoring by gaming companies

The current situation is irrational. It’s easy for a business providing gaming to UK consumers to move offshore, and save large amounts of corporation tax. That loses tax revenue; it also puts UK-based operators at a commercial disadvantage, giving them a large incentive to move offshore. This is not in the UK’s interest.²⁴

It would be easy to reverse this: the Government could equalise all UK duties and tax for onshore and offshore businesses that provide internet/remote gaming services. There are two ways this could work.
- The first and “neutral” way would be to raise gaming duties for internet gambling, make the duties non-deductible for corporation tax, but instead make them fully creditable against corporation tax (and foreign corporate taxes).²⁵ Say the rate of betting duty was 19.6% – Sky Bet’s UK business in 2024 would then have paid £58m of corporation tax plus £56m of gaming duty.²⁶ That’s £114m in total – the same as it paid under the current rules. But if Sky Bet had moved to Malta then it would have paid £8m of Maltese corporate tax plus £106m of gaming duty – again £114m. The corporate tax advantage of moving offshore has disappeared.²⁷ In fact staying in the UK, or moving back to the UK, would save most businesses money – because operating in tax havens like Malta tends to be awkward and expensive.
- The more aggressive approach would be to credit corporation tax but not foreign taxes. So moving to Malta would increase Sky Bet’s taxes, and offshore gaming companies with UK customers would reduce their tax if they moved to the UK. This kind of approach would be prohibited by EU law if we were still a member of the EU; but of course we are not.
Either approach would put an end to offshoring by internet gaming companies, and encourage relocation to the UK.²⁸ ²⁹

Sky Bet’s response

We asked Flutter, Sky Bet’s owners, for comment. They sent this reply to us and to ITV News:

“Flutter paid more than £700 million in taxes to HMRC last year and we employ over 5,000 people across the UK including almost 2,000 in Leeds and 600 in Sunderland.

As with most global businesses around the world, we are constantly striving to remain competitive and efficient and to give ourselves the best chance of success in an incredibly challenging environment.

The challenge we face is only made harder by the recent Gambling Act Review, the significant rise of illegal, unregulated black-market competitors and the possibility of tax rises in the Budget.

In June this year, after migrating Sky Bet onto the same technology platform as our other brands, we decided to move a number of commercial and marketing roles to our commercial centre in Malta – where Flutter already employs over 750 people.

This decision was made for a number of strategic and commercial reasons and will have some tax implications. But Flutter is committed to the UK and Sky Bet will continue to pay UK corporation tax on its profits.“

This is unconvincing. The new SBG Sports Limited was established in May 2025, long before the various Budget rumours started circulating. Any measures arising from the Gambling Act Review – new duties or regulation – will apply to gambling businesses with UK customers, regardless of where they are based.

We told Sky Bet we thought they were saying something that wasn’t true, and if they had given a false explanation to HMRC then that could have serious consequences. They didn’t like our characterisation, but didn’t provide any further explanations. They haven’t denied putting a scheme in place to avoid the VAT.

All of this adds to our sense that Sky Bet is hiding the true reason for its move.

Many thanks to Joel Hills at ITV – this story only exists because he spotted the Malta migration. And thanks to A O, K and M for their insights on the gaming industry and its tax treatment.
Footnotes
1. Initially Sky plc sold to CVC, retaining a 20% stake. Then CVC and Sky sold out to Stars Group in 2018 for $4.8bn. ↩︎
2. Historically, Hestview was the UK-licensed bookmaker in the group and the entity that licenced the “Sky Bet” brand from Sky plc. The accounts say Hestview was the “economic beneficiary of the Sky Bet brand”. It seems the position is now that SBG Sports Limited runs the sports betting business, Bonne Terre Ltd (a company incorporated in Alderney – part of Guernsey with particularly favourable gaming regulation) the egaming/casino business, and Hestview has retained “free to play” business. ↩︎
3. We are using round numbers throughout but they are representative of the actual figures. ↩︎
4. i.e. because sports betting is VAT exempt in the UK and so Sky Bet cannot recover the VAT. If this was (eg) a supermarket buying advertising then it would recover it. A further point of detail: if any advertisers were outside the UK then Sky Bet would “reverse charge” the VAT – so the UK Sky Bet business would always be subject to irrecoverable UK VAT on its marketing spend. ↩︎
5. Or possibly an error in the accounts, with someone writing “SBG Sports (Malta) Limited” instead of “SBG Sports Limited, Malta branch”. Either way, we can find no record of an “SBG Sports (Malta) Limited” in the UK, Malta, or anywhere else. ↩︎
6. “Sky Betting and Gaming” ↩︎
7. A branch isn’t a legal entity – it’s just a place where you operate. Banks often have branches because of the way bank regulation works (e.g. most of the world’s largest banks have branches in London). Some other regulated sectors do this too (insurance in certain cases). But outside of this kind of case, branches are unusual, and often a sign of tax/VAT avoidance. ↩︎
8. This is probably why they picked Malta rather than Alderney, even though Alderney tax and regulation is more straightforward (and in practice usually zero tax). You can’t realistically move dozens of employees to Alderney – the island is just too small. You wouldn’t be able to achieve the “substance” that is realistically required to escape UK corporation tax and VAT. ↩︎
9. Possibly the intention is that the company becomes Maltese tax resident. The UK/Malta double tax treaty has an old-fashioned “place of effective management” tie-breaker. Modern treaties have an anti-avoidance provision created by the OECD BEPS Project which means that tax authorities have to agree any shift in corporate residence. However our industry sources expected that wouldn’t be the planning here, and the entity was in fact intended to remain UK resident with a Maltese branch. More on the reasons for this below. ↩︎
10. Malta is not a normal country – only a few years ago, a journalist investigating corruption was murdered by a car bomb. The EU Commission shouldn’t permit Malta to engage in aggressive tax competition, like having a de facto 5% rate of corporate tax, and manipulating VAT grouping rules. However it seems unlikely we’ll see any action in the short term. ↩︎
11. Of course a branch doesn’t pay a dividend – SBG Sports Limited, the UK company, would pay the dividend. We’re assuming that “counts” for Maltese purposes (perhaps because they regard the dividend as having a Maltese source, and/or reflecting the underlying Maltese corporate income tax. We don’t know who currently owns SBG Sports – it was initially Bonne Terre in Guernsey/Alderney). ↩︎
12. Of course assuming profit is still £156m. ↩︎
13. In principle the tax benefit should be greatly limited by Pillar Two, the OECD 15% minimum tax. We’re still in the first few years of implementation, so it’s hard to say what is happening in practice here. One possibility is that Sky Bet really is paying 15% tax on its profits (in Ireland or some other jurisdiction); in that case VAT may be central to the structure. The other possibility is that a structure and/or accounting methodology is being used that minimises the impact of Pillar Two (and that may be linked to the unusual decision to use a Maltese branch rather than a Maltese company). We expect this kind of question will have answers in a few years, but for now all we have is intuition: and our intuition is that Sky Bet/Flutter are doing something to mitigate the 15%. ↩︎
14. On the basis it makes taxable supplies to SBG Sports Limited. ↩︎
15. This branch would solely be a tax play. ServiceCo has maybe a couple of people doing something that can be justified as a real activity (for example managing advertising for a particular (small) part of Sky Bet’s business). ↩︎
16. Malta has acted in a predatory way here, only permitting VAT groups for sectors where cross-border tax avoidance will be attractive, with advisers being fully aware that they can use this VAT grouping for avoidance purposes. The EU Commission clearly doesn’t like this, but thusfar hasn’t acted. ↩︎
17. There are numerous exceptions, of course, particularly if the business is ultimately owned by a UK individual or company, or if it holds UK real estate. However for a foreign-owned trading business, the general proposition is broadly correct. ↩︎
18. Which then makes the IP available to its Maltese branch. ↩︎
19. There are clear signs of that. Why use a branch rather than a Maltese company? One reason is – we would speculate – that it means that there’s no Maltese VAT on licence fee payments, because the IP is routed from Hestview Limited, via SBG Sports Limited’s UK headquarters to its Maltese branch. The UK companies would likely be VAT-grouped (so no VAT there). The arrangement between SBG Sports Limited in the UK and its Maltese branch would be an intra-entity transaction, and therefore not subject to VAT. It’s possible that the branch is also part of the direct tax planning. ↩︎
20. This is the opposite of the structuring used by many foreign companies with businesses in the UK, where they seek to maximise the licence fee paid by the UK operating business to the foreign owner of intellectual property. ↩︎
21. And there will be branch allocation issues unless SBG Sports Ltd is Maltese tax resident. However we wonder if the intention is in fact that the company remain UK tax resident. If they are careful about substance, the diverted profits tax (originally announced as a “Google tax“) wouldn’t then apply, because SBG Sports Ltd would be a UK company with a foreign branch, not a foreign resident company. ↩︎
22. And if it is intended to be Maltese tax resident, it may accidentally become UK tax resident. ↩︎
23. Hastings UK was making supplies (back office insurance related) to a non-EU insurer. Until 2019, these supplies were “specified”, meaning that there was VAT recovery, even though these services would be exempt in the UK. Hastings – and many others – took advantage of that by “looping” supplies to UK clients via non-EU entities, solely to achieve recovery. The law was changed in 2019 to stop these structures – recovery would only be permitted where the ultimate customer was outside the EU. The FTT decided in Hastings that EU law prevented UK VAT law from looking at the ultimate recipient of supplies. The “Offshore Looping Order” was held to be ultra vires because it wasn’t compatible with the Principal VAT Directive – the UK couldn’t restrict input tax recovery by looking through to the ultimate insured when the Directive didn’t. ↩︎
24. This is regardless of our position on whether we should encourage or suppress gaming generally; the question is whether the gaming industry that we do have should be onshore or offshore. ↩︎
25. It would only be the corporation tax on the gaming-duty-relevant profits that was creditable. ↩︎
26. The corporation tax figure is 25% x its 2024 profits (ignoring its deduction for gaming duty). The gaming duty figure is 19.6% of £580m, minus the £58m of corporation tax. ↩︎
27. It might be argued this breaches the UK’s double tax treaty with Malta. That is probably incorrect, because gaming duty is not a tax on profits. However the point is academic: even if gaming duty were (for some reason) regarded as a tax on profits, there’s no route to any appeal under UK tax law, because gaming duty is not one of the taxes which can be overridden by tax treaties. ↩︎
28. One side-effect of moving from corporation tax plus duties to pure duties is that operators with lower margins would pay a higher effective rate, and more efficient/higher-margin operators would be favoured. Given the essentially similarity of internet gaming businesses, this is significantly less problematic than it would be to (for example) tax digital companies on a gross revenue basis. ↩︎
29. An additional step that could be taken is to amend the diverted profits tax so section 86 applies to artificially structured foreign branches of UK companies. ↩︎
18 November 2025
The Budget 2025 tax calculator
This online calculator calculates your tax on employment, self-employed or partnership income, and shows how it changes under a variety of Budget proposals. It charts the marginal and effective tax rate at all income levels, and shows where you fall on that chart.

Now updated for the actual Budget, with rates for 2026/27 rates and 2027/28 (assuming the only changes are those announced in the Budget to property, savings and dividend rates).

The charts show that teachers, doctors and others earning fairly ordinary salaries can face marginal tax rates of more than 60%, and sometimes approaching 80%. We believe it’s inequitable and holds back growth. Rachel Reeves should commit to ending these anomalies.

This Government was elected on a platform of kickstarting economic growth. It has a large majority, and probably four years until the next election. It’s a rare chance for real pro-growth tax reform. That’s all the more necessary if we are going to see tax rises.

It’s important to note: the point of the tax calculator is not that UK tax rates are currently too high. Overall they are not; they’re low by international standards, and the average worker pays less tax on income than their equivalents in other countries. But there are earning levels at which there are anomalously high rates, and that is damaging.

The tax calculator

Your browser can’t display this interactive content. <a href="https://taxpolicy.org.uk/wp-content/assets/2025marginal_tax_calc/" target="_blank" rel="noopener noreferrer">View it in a new tab</a>.

You can view the calculator full screen here.

A quick guide:

When it starts up, the chart shows the current UK tax marginal rates at each income point. You can enter your income and see your tax result¹, and your position on the chart. You can use the “tax rules” dropdown to select:
- The 2023/24 rates.
- The Scottish current or 2023/24 rates.
- The IFS suggestion to increase income tax by 1p (it’s one of several options, not a proposal as such).
- The Resolution Foundation proposal to “switch” 2p from employee national insurance to income tax
- The Green Party proposal to abolish the national insurance upper earnings limit.
- The proposal to charge employer national insurance on partnership/LLP profits.
- The suggestion that income tax rates will be maintained, but thresholds will be cut (for which we are using figures calculated by Julian Jessop).
The app will then chart the marginal rate at each income point or (if you change the top left dropdown) give you a chart of effective rate at each income point, or net income vs gross income.

You can select a scenario in the “compare against” dropdown, and that scenario will be added to the chart (dashed red line).

The options

You can select options that demonstrate some of the features in our tax system that create anomalously high marginal tax rates:
- You can choose whether you’re employed, self-employed, retired, a contractor paid under “IR35“, or a member of a partnership/LLP.
- Once you increase “number of children” above zero, you see the effect of child benefit.² This increases the income of anyone with children under 16 (or under 20 if in approved education or training) but, once their income (or that of a cohabiting partner) hits £60k, the “high income child benefit charge” (HICBC) starts to claw child benefit back. It’s completely gone by £80k. That creates a very high marginal tax rate at £60k – 58% for someone with three children, and 67% if they also have a student loan.
- If you add “childcare subsidy” you can model the impact of the tax-free childcare scheme and the various Government free childcare hours schemes in England, Wales and Scotland.³ These schemes are generous – potentially worth £20k in some cases, and we classify that as increasing your income (and therefore reducing your effective tax rate). However the schemes are completely withdrawn if income exceeds £100k (with the exception of the Scottish scheme⁴). That creates the very odd effect that someone using the schemes becomes worse off if their income exceeds £100k – a marginal tax rate well in excess of 100%.⁵
- The “student loan” option applies the standard 9% student loan repayment rate (or you can select other rates in the dropdown).⁶
- The “marriage allowance” option deals with the small element of personal allowance sharing between married couples.
- And anyone earning £100k sees their tax-free personal allowance reduced, by £1 for every £2 of income above £100k. This isn’t an option – it happens automatically. It means the marginal rate at £100k is 62%, falling back to the “correct” amount of 47% once the personal allowance is completely gone at £125,140.
What the marginal rates mean

The “marginal tax rate” is the percentage of tax you’ll pay on the next pound you earn.⁷ is withdrawn results in nonsensical marginal rates It’s therefore critical because it impacts your incentive to earn that pound. It’s obvious that if 100% is taxed you’ll have a lower incentive than if 0% is taxed; and the.same is true for 70% vs 40%. We’ve written a fuller explanation of the precise meaning of “marginal tax rate”, and why it’s so important.

If you turn on all the “options” you’ll see a series of very high marginal rates across the UK, over 70% in some cases. The rates are even higher in Scotland (the red dashed line):

The marginal rate from the marriage allowance and the childcare subsidies is so high that it goes off the above chart. So it’s clearer if we plot net income vs gross income:

The marriage allowance is so small that it’s invisible in this chart (it’s a largely pointless piece of complication). The withdrawal of childcare subsidies, however, completely distorts the picture. When you earn £100k, you immediately lose these. So in this chart, with someone receiving £20k-worth of childcare subsidies, they are suddenly £20k worse off when they earn £100k, and their net income doesn’t recover to where it was until their gross income reaches £152k (or, in Scotland, £170k.⁸)

There are other minor effects which, for simplicity, our calculator does not cover.⁹

One issue not covered by the calculator is the high marginal rates impacting working people receiving benefits (other than child benefit). This improved significantly after the introduction of universal credit, but problems remain, particularly around the interaction with child benefit. Benefits are outside our expertise and therefore are not covered by this article or our calculator.

What are the real world effects?

Thanks to a recent series of Freedom of Information Act applications by Tom Whipple at The Times, we can see that large numbers of people take steps to avoid these high marginal rates:

That pronounced “bump” at £100k represents approximately 32,000 taxpayers managing their income so it doesn’t go past £100k. However it’s important to recognise that counting the people in the “bump” gives us a lower bound: there will be others who hold back their income above or below the £100k point, but outside the visible “bump”. There will be others who respond to the incentives by ceasing working altogether or leaving the UK (anecdotally there are large numbers of professionals moving to Dubai; however there’s no hard evidence as to the scale of the effect).

This, however, is nothing compared to the “bump” at £50k – there are 230,000 taxpayers there. Again this is a lower bound.

This is from tax year 2022-23 when the child benefit clawback was at £50k – this will be an important cause of the bump, but we expect there are three others.¹⁰

These “bumps” reflect broadly three taxpayers responses:
- No change in economic activity (i.e. working hours) but taking steps to legally reduce taxable income. The most obvious example is making additional pension contributions and/or salary sacrifice. Additional pension contributions are an attractive option to people nearing retirement, but unattractive for people at the start of their careers.
- No change in economic activity but tax evasion – i.e. self-employed people artificially depressing their income by not declaring income over £50k to HMRC.¹¹
- Actually reducing their income – for example self-employed contractors turning away work, or employed staff working fewer hours (or even, in at least three cases we’ve heard of, refusing promotions).
Both outcomes reduce the tax people are paying. However the second outcome has an obvious wider effect – it’s reducing the supply of labour.

We’ve heard anecdotally from managers unable to persuade staff to work more hours, or return to work full time – it’s a particular problem for hospital managers, as junior consultants’ pay is within the £100k “trap”.

But it’s important not to just focus on the impact on jobs that we might think are of particular societal importance.

It’s also problematic if an accountant or estate agent turns away work because of high marginal rates – it represents lost economic growth and lost tax revenue.¹² It also makes people miserable.

Inflation and frozen thresholds mean the problem is getting worse each year – the data The Times obtained shows much larger “bumps” in 2022/23 compared to 2021/22. So 2025/26 will be considerably worse:

What’s the solution?

These problems are getting worse over time, as fiscal drag takes more and more people into the thresholds that trigger these high marginal rates.

When Gordon Brown introduced the personal allowance taper in 2009, only 2% of taxpayers earned £100,000; by 2026/27 about 6% of taxpayers will. When George Osborne introduced child benefit clawback a year later, only 8% of taxpayers earned £50,000; by 2026/27 about 17% of taxpayers will earn £60,000.¹³

This creates a double problem. First, the economic distortions created by the high marginal rates start to impact into mainstream occupations (doctors, teachers). Second, the revenues raised by the marginal rates are now so great that they become hard to repeal.

Ending the high marginal rates in one Budget is, therefore, not realistic – particularly in the current fiscal environment. The cost of making child benefit, the personal allowance, and childcare subsidies universal, would be expensive (somewhere between £5-10bn, depending on your assumptions). The obvious way of funding this – increasing income tax on high earners, appears to have been ruled out.

We would suggest five modest steps:
- An acknowledgment that the top marginal rates are damagingly high, and that the Government will take steps to reduce them when economic circumstances permit.
- Some immediate easing of the worst effects, at minimal cost to the Exchequer, for example by smoothing out the personal allowance taper over a longer stretch of income, therefore reducing the top marginal rate, and slightly increasing the additional rate so that the measure is revenue-neutral overall.
- A commitment to uprate the thresholds for clawback of child benefit, personal allowance and childcare subsidy in line with earnings growth or inflation.
- A commitment that no steps will be taken to make the high marginal rates worse, or create new ones.
- A new rule that Budgets will be accompanied by an OBR scoring of the highest income tax marginal rates before and after the Budget.
There’s a coherent political case for people on high incomes paying higher tax (whether we agree with it or not). There is no coherent case for people earning £60k, or £100k, to pay a higher marginal rate than someone earning £1m. It’s inequitable and economically damaging. Ms Reeves should call time on high marginal rates.

Code

The code for the calculator is available here. If you want to experiment with different rates you can download all the files and run “index.html” locally. You can then edit “UK_marginal_tax_datasets.json” and add different scenarios.

The data showing the “bumps” is available here. Many thanks to The Times for sharing it with us, and letting us publish it.
Footnotes
1. Please note that the calculator is intended to illustrate tax policy. It is not designed to actually calculate your tax for your tax return, and should not be used for that purpose. ↩︎
2. Note there is no limit on how many children you can have for child benefit purposes – and that produces some extremely high marginal rates if you select e.g. six children. ↩︎
3. The way the childcare free hours schemes work is complex and varies considerably from individual-to-individual – the calculator doesn’t attempt to provide a detailed analysis but simply lets you enter the amount of overall subsidy. ↩︎
4. Which provides up to 1140 hours of free childcare. This isn’t means-tested. However the tax-free childcare scheme is means tested, even in Scotland. ↩︎
5. It can be expressed as 2,000,000% if we look at the loss of income for someone with £20k of free childcare who was earning £100k but receives a £1 pay rise. However in reality the concept of a marginal tax rate has little meaning in such circumstances. ↩︎
6. Noting of course that Scottish students don’t have to pay tuition when studying at Scottish universities, so their student loans will be much lower. The full rate is really only relevant to graduates who studied elsewhere in the UK and then move to Scotland. ↩︎
7. The calculator calculates your marginal rate over £100 rather than £1. That’s necessary because the personal allowance taper reduces the personal allowance by £1 for every £2 of income over £100k. If the marginal rate is calculated over £1 then it produces a different result for even numbers than odd numbers, which doesn’t make sense. The choice of £100 is arbitrary, but has no effect other than to change the (essentially meaningless) childcare subsidy marginal rate. ↩︎
8. Although the Scottish childcare scheme is less generous and so this problem is usually less extreme in Scotland. ↩︎
9. The £1,000 personal savings allowance drops to £500 once you hit the higher rate band, and to zero once you hit the additional rate band. The £5,000 starting rate for savings tapers out, but slowly, and so it just somewhat increases the marginal rate – it’s also less relevant for most people. ↩︎
10. First, people responding to the increased marginal rate of the higher rate tax band – but this effect should be small (when the marginal rate rises from 28% to 42% that means take-home pay on the next pound is reducing by about 20%). Second, people irrationally responding to the higher rate band – we found evidence that a large number of people believe that when you cross the higher rate threshold, you pay a higher rate of tax on all your income. Third, owners of small/micro businesses whose income fluctuates year-by-year managing the profits they take out so they don’t cross the higher rate threshold. It should be possible to definitively establish the impact of child benefit clawback when we obtain data on 2024/25, the first year when the child benefit clawback threshold was moved to £60k. ↩︎
11. It ought to be possible to check the extent of this by comparing the data for taxpayers on PAYE with other taxpayers, i.e. because tax evasion is not generally practicable for people on PAYE. A more sophisticated analysis would look at the way reported taxable income changes over time, as the income increases and as it decreases. ↩︎
12. Particularly when the economy is running at very little spare capacity; it would be different if there was high unemployment/plenty of spare capacity, because the work that was turned away would (at least in theory, in the long term) be undertaken by others ↩︎
13. Data from the HMRC percentile stats, uprated for post-2022 inflation. ↩︎
12 November 2025
Douglas Barrowman and Michelle Mone may have avoided tax on their £65m PPE profits
During the pandemic, Douglas Barrowman’s company, PPE Medpro, sold £200 million of PPE to the Government. It made £65m profit, which went into trusts benefiting Barrowman and Mone’s families. Most of the PPE was later ruled to breach sterility standards but, rather than repay the money, Barrowman put PPE Medpro into administration.

New documents show HMRC is now claiming £39 million in tax, in addition to the £122m (plus interest) owed to the Government for the faulty PPE. We think we know why.

Barrowman companies have previously run aggressive tax avoidance schemes and, when they failed, entered administration so that no tax was paid. The evidence suggests he may have done the same again – using a scheme to avoid tax on the £65m, and an administration to ensure that any HMRC challenge is pointless.

However new rules mean that this may not be the end of the story. HMRC may be able to recover the £39m from Barrowman personally.

Barrowman’s history of selling avoidance schemes

Barrowman styles himself as an entrepreneur. In reality, most of his money was made from selling highly aggressive tax avoidance schemes. When, inevitably,¹ HMRC cracked down on the schemes, his clients were left with huge liabilities, many were financially ruined, and four died by suicide.

We believe there is evidence that some of these schemes involved deception: of HMRC, his own clients and his commercial counterparties, and we’ve called for this to be investigated as potential fraud.

As well as selling failed avoidance schemes, Barrowman’s companies have a history of disregarding their legal obligations. Two Barrowman companies unlawfully failed to disclose their tax avoidance schemes to HMRC. One of these companies then unlawfully failed to comply with an HMRC information request. And Barrowman continues to unlawfully hide his ownership of companies – he has admitted lying about concealing his ownership of PPE Medpro, but the company’s records still fail to record Barrowman as the beneficial owner.²

Barrowman’s history of avoiding tax himself

We know about at least one previous case where Barrowman made a profit from a transaction, avoided UK tax on that transaction, and then put the company into administration before HMRC could challenge the arrangements.

In July 2008, a Spanish company called B3 Cable Solutions made a €6.3m payment to a UK company, Axis Ventura Limited. That payment was intended to be tax-deductible, reducing B3 Cable Solution’s Spanish corporate tax bill by €1.6m (and the Spanish tax authorities challenged this.³) Axis Ventura Limited then proceeded to avoid UK tax on the €6.3m it received. It paid all the money to an employee benefit trust, which made loans to directors/employees and/or their dependents⁴. We expect neither the company nor the beneficiaries of the loans paid any tax⁵ on the loans.⁶

Barrowman’s history of walking away from the consequences

After extracting their cash from the company, without paying any tax, Axis Ventura Limited was put into administration.

In other words, Barrowman and his team walked away from Axis Ventura Limited – winding it up with no cash, in circumstances where it was in my view likely that HMRC would raise an enquiry and seek to recover tax, and it is (at the very least) plausible Barrowman and the others involved knew that they would. The directors nevertheless signed a declaration of solvency.

This is a classic way to eliminate all risk of tax avoidance. You run your tax avoidance scheme in a company without many assets, make sure you have documentation showing that you believed the avoidance worked, and then wind up the company afterwards, making any HMRC enquiry pointless. It’s sometimes called a “bottom of the harbour” scheme.⁷There are rules enabling HMRC to go after shareholders in some circumstances but those in existence in 2008 didn’t apply to PAYE. There were other rules potentially applicable; we assume they were not used.

In the event, HMRC assessed the company to owe £1.4m of tax, but it doesn’t look like they were ever able to recover this.⁸

As is typical of Barrowman⁹, he almost, but not quite¹⁰, denied any involvement in Axis Ventura Limited.¹¹

This is not the only case where a Barrowman-linked company avoided tax and was then put into insolvency. AML Tax (UK) Limited, a company used to sell the doomed contractor tax avoidance schemes, owed £159k of tax and penalties: it made two tax appeals and, when it lost, went into insolvency, never paying a penny.

Is that what Barrowman did with PPE Medpro?

It’s been reported that PPE Medpro made a £65m profit, which ultimately ended up in trusts and companies controlled by Barrowman.

A normal company in PPE Medpro’s position would have paid corporation tax of around £12m (19% of £65m) and then paid a dividend of the remaining £53m to its shareholders.¹²

There’s no sign of that in PPE Medpro’s accounts, and it seems unlikely that is what happened. PPE Medpro’s administrators¹³ just published a report, which, says:

“A review of the Company’s bank statements reflects a small number of entities that have received the vast majority of funds from the Company’s bank account.
Information requests have been issued to third parties who appear to have relevant information and/ or documentation which will aid in this review. No further information can be provided at this time whilst investigations remain ongoing.”

That, plus Barrowman’s history, suggests to us that no dividend was paid, and instead payments were made to companies/trusts. That is one of the scenarios we discussed when we first looked at PPE Medpro’s accounts.

The administrators report says HMRC claims to be owed £39m.¹⁴ What could be the reasons for this?

£39m is a lot more than the £12m of corporation tax we’d expect PPE Medpro to pay. But what if PPE Medpro did something similar to Axis Ventura Limited, but on a larger scale?

We would speculate, based on the past actions of Barrowman entities, that the facts could have been something like this:
- Barrowman acted as a shadow director of PPE Medpro Ltd – someone who isn’t officially a director, but acts as one, and is therefore regarded as a director by the Companies Act.¹⁵
- PPE Medpro extracted its profits as a £65m payment to an entity. This was, in essence, a means of providing a reward to Barrowman.
- That entity then made an on-payment to a trust or other entity chosen by Barrowman.
- PPE Medpro claimed the £65m payment was deductible, meaning it had no corporation tax liability, and no other entity or person paid tax on the amount.
That would be a typical Barrowman avoidance scheme. There would probably be other elements, intended to defeat the relevant anti-avoidance rules; but the history of the last 25 years is that such schemes inevitably fail in the courts.

The consequence for PPE Medpro of the scheme failing would be:
- PAYE income tax at 45% = £29m
- Employee national insurance: at 2% = £1m
- Employer national insurance at 13.8% = £9m
That totals £39m. It’s quite the coincidence that’s the same number HMRC is claiming.

Likely it’s not as simple as this – the actual profit may be smaller, and we’d expect HMRC to charge interest. But this for now is our best guess as to what the £39m represents.

It’s important to say that this is informed speculation. We do not know that this is what happened. It is possible that Barrowman paid the corporation tax in full. We haven’t asked Barrowman’s lawyers for comment because he has a history of instructing his lawyers to lie to the media.

Will Barrowman get away with it again?

It’s not 2008. It’s harder for people to strip assets from companies using tax avoidance schemes and then walk away.

Under the “joint and several liability notice” rules, introduced in 2020, shadow directors and others can be jointly and severally liable if a company avoids or evades tax and then becomes insolvent.¹⁶

We would expect HMRC is considering whether and how to apply these rules to PPE Medpro.

Many thanks to K for accounting input, C for insolvency law advice, and M for his remuneration tax expertise.
Footnotes
1. The Government had previously warned that remuneration avoidance schemes would be subject to retrospective liability. This is what happened. Barrowman’s companies failed to pass this critical warning to their clients; in any event the schemes were technically hopeless (and retrospective legislation was employed because the sheer number of schemes meant that individually challenging them was impracticable). Our view is that it’s fair to blame HMRC for not cracking down on the schemes at an early stage, but ultimate responsibility for mis-selling technically hopeless avoidance schemes rests with Barrowman and other promoters. We’ve more on the history here. ↩︎
2. This is a recurring theme. AML Tax (UK) Ltd, the tax that breached the DOTAS and information notice rules, never recorded Barrowman as its beneficial owner. The court appointed liquidator thought that he was the true beneficial owner. ↩︎
3. They prosecuted Barrowman and others for tax fraud; Barrowman and the others were cleared; we don’t know the outcome from a Spanish civil tax perspective, but the Spanish tax advisers we spoke to have said that the reported remarks of the judges imply that a deduction was not in fact available. ↩︎
4. We know about the EBT from the 2008 accounts, which include a curious reference to a £61,000 investment “previously held on the balance sheet [which] was not owned by the company” – we don’t know what that could mean. ↩︎
5. That said, it’s not clear how the company obtained a deduction given Schedule 22 FA 2003 and Part 12 CTA – possibly there was some additional structuring here that’s not visible in the accounts of the liquidator’s report. Given the history of Barrowman’s companies, it’s unlikely they just forgot about the point – there would have been some “structuring” intended to defeat these rules, albeit the kind of “structuring” that hasn’t succeeded in any UK court decision for many years. We don’t believe it’s legitimate to plan your taxes on a basis that the courts have repeatedly rejected. ↩︎
6. This was in our view clearly tax avoidance. The intention of Parliament was that people pay tax on their remuneration. Recasting that remuneration in the form of a “loan” (scare quotes because few if any of these loans were intended to be repaid) subverts that intention. Nevertheless, a surprising number of people at the time thought that the EBT/loan structure “worked”, including a series of tax tribunals, and it took a decision of the Inner House of the Court of Session (broadly the Scottish equivalent of the Court of Appeal) and then the Supreme Court to reach the sensible and obvious conclusion that payments to EBTs were “earnings” and should have been subject to PAYE. We wrote about some of the history of these schemes here, but it’s important to note that those tribunals, which found in favour of the schemes did so on the basis of an understanding that the loans were intended to be repaid. That understanding was in most cases based on deceit from scheme promoters and users – the planning only makes sense in most cases if the loan is not intended to be repaid, and in almost no cases were loans actually repaid. ↩︎
7. Although strictly that term relates to a practice in Australia where there was no tax avoidance – just asset-stripping a company and leaving it to go bust with unpaid tax. We don’t normally recommend Wikipedia articles, but this is a good one. ↩︎
8. The liquidation converted into an insolvent liquidation in 2015. HMRC kept the insolvency going for years, even though the company had no assets – the only reason we can think of for HMRC to take such a step would be because they were looking into whether they could recover some of the £1.4m from Barrowman and other current/former shareholders and directors. The insolvency finally concluded in July 2021, with the company wound up, still owing £1.4m to HMRC. ↩︎
9. This all follows the established pattern: a company associated with Barrowman does something questionable, and he denies being a shareholder or director. In at least two cases (PPE Medpro and Vantage Options Limited) we know those denials were lies. In those cases the apparent shareholder was actually a trustee of a trust which was (in practice if not in legal theory) controlled by Barrowman. ↩︎
10. Here’s what he doesn’t deny: being the ultimate beneficial owner and the person who ultimately controls the company. We asked his lawyers last year if they would comment; they declined. ↩︎
11. Until 28 March 2008, Barrowman was a director and shareholder of Axis. The other director was (and remains) Timothy Eve, deputy chairman of Barrowman’s Knox business. After Barrowman stepped down, Michael Walton and Mark Price Williams became directors, and Paul Ruocco became the shareholder. Williams and Ruocco are frequent Barrowman associates. Walton was the original owner of Tri-Wire, a company acquired by B3 Cable. From April 2016, the “person with significant control” of Axis should have been registered. But nobody was listed as the PSC, not even Paul Ruocco, who held all the shares. That kind of non-compliance is typical for Barrowman-linked companies.
  
  So whilst we can’t know for sure who was really controlling Axis Ventura Limited, the individuals involved, the non-denial, Barrowman’s past behaviour, and the existence of the prosecution, all suggest that Barrowman was controlling or at least influencing the company even after he ceased to be a shareholder. ↩︎
12. PPE Medpro was never owned by Barrowman, or another Barrowman company. Its sole shareholder has always been a Barrowman employee. Barrowman has admitted that he’s the ultimate beneficial owner of PPE Medpro, but PPE Medpro’s Companies House entry claims that these employees are the sole beneficial owners. That seems likely to be untrue, and indeed a criminal offence. We expect in reality the named Barrowman employees have owned PPE Medpro as trustees of a trust. ↩︎
13. There were originally joint administrators, Mazars and Clarke Bell. Clarke Bell recently resigned; we don’t know why. ↩︎
14. The report also identifies that the directors say HMRC owes them £948k. This could be VAT. PPE Medpro wasn’t required to account for VAT on its sales of PPE because, at the time, PPE was zero-rated. If PPE Medpro incurred VATable costs (e.g. legal fees) then ordinarily it could have been able to recover the costs. ↩︎
15. And also – critically – by remuneration tax anti-avoidance rules, which treat shadow directors in the same way as directors. ↩︎
16. It’s also possible that PPE Medpro’s administrators will be able to recover tax from Barrowman or other persons to whom payments were made. Some insolvency practitioners have been successful in recovering tax from directors after HMRC pursued failed avoidance schemes. Whilst the administrators of PPE Medpro were appointed by a Barrowman entity, they owe duties to creditors generally, and if they don’t act in accordance with those duties then a court can require them to act fairly, or even remove them. ↩︎
6 November 2025
Council tax on ‘expensive homes’ – but most of the money comes from the not-so-rich
The FT has reported that Rachel Reeves is planning a “Budget tax raid on the owners of expensive homes”, expected to raise around £4bn. But less than a 20% of that revenue comes from homes in the top council tax band, while roughly 80% comes from the much larger group of homes in the second-highest band.

We’ve built an online calculator where you can test different council tax changes, so you can see how small changes affect total revenue – and what they mean for individual taxpayers.

This is an update of our previous article, which looked only at changes to the top band. And there’s more here, from Chaminda Jayanetti at Politics Home looking at the regional unfairness that would be created by increasing Band G and Band H.

How much is raised? And from whom?

Council tax is based on 1991 property values, divided into eight bands from A to H. Band H is the highest – roughly homes now worth over £1.5 million – and Band G the next, typically £750k – £1.5 million.¹

This calculator lets you experiment applying different rates to Band G and Band H (you can view it full screen here):

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Note that all figures here are for England. Scottish and Welsh council tax are devolved, and so the bands are slightly different. If applied across the whole of the UK, expect overall revenues to be 5-10% higher than those shown in the calculator.

What the calculator shows about the proposal in the FT

The simplest approach is the one the FT says the Government is considering – doubling council tax for Band G and Band H.² You can model this in our calculator by setting the Band G and Band H multipliers to 2.0:

As the FT says, doubling both bands would raise about £4 billion – but more than three-quarters of that would come from Band G households. In practice, that means families in £750k to £1.5m homes would see their council tax double – an average rise of around £4,000.

The reason is simple: there are roughly eight times as many homes in Band G as in Band H.³

Band H represents the UK’s 0.6% most valuable homes. Band G represents the next 3.5% most valuable⁴ – so we should expect in many cases people living in Band G homes earn £100k+. For those just in this bracket, that means £67k after tax (more if it’s a dual income household). A £4k tax increase is significant for them.

Council tax liability falls on occupiers – whether homeowners or tenants. In the long term, landlords rather than tenants bear the cost of council tax (because it reduces rents) but in the short-to-medium term all the cost falls on tenants.

Can we achieve the same result in a fairer way?

It seems intuitive that we could raise more money by leaving Band G alone, and instead adding new bands at the top.

You can test this in the calculator by clicking “split band H into new bands”. This creates three new above band H (you can change the values for each band using the slider).

You’ll see you have to apply an unrealistically high multiplier to these bands (increasing council tax bills five to ten times) to even approach the revenues achieved by a simple doubling of Band G and Band H council tax:

We can’t realistically expect people in £1.5m homes to pay a £25k council tax bill. This is not a sensible proposal.

What if we try a mansion tax?

We can achieve a fairer result if, instead of a multiplier, we apply a “mansion tax” to all the properties in Band H – i.e. a % of property value within the bands. That has a much reduced impact in those at the bottom of the band (say £1.5m to £3m properties) and a much higher impact at the top end.

You can see the impact of this in the calculator by clicking the “New Band H % tax” button. This then applies the set percentage to all property value within that band (on top of existing council tax).⁵

However a percentage tax fails to raise as much as a simple doubling of Band G and Band H council tax unless we apply rates approaching and exceeding 2%:

Rates this high would in our view be unwise. They would be capitalised into property values (i.e. because people pay less for property that carries a liability). We estimate this effect would cause a 20%+ one-off fall in high end property values. This would have two consequences:
- First, it would reduce SDLT revenues. This will be a large effect because of the disproportionate SDLT revenue from high value property. We estimate SDLT revenue could fall by around £2bn/year.
- Second, it would be unfair to the current owners, operating in a similar way to a one-off property wealth tax.
There’s also a practical problem: creating a valuation system for applying a percentage tax to the c150,000 properties over £1.5m would require considerable resources (and take time to create). The council tax banding system was designed to avoid such difficulties.

So it’s easy to see why the FT says the Government is more drawn towards a simple doubling of rates.

The fairness problem

Our view is that it is absolutely fair and right to create new council tax bands at the top end and apply higher rates to them (provided we don’t set the rates so high that we see very significant declines in property value).

It does not, however, seem fair to greatly increase council tax for people in Band G. People living in Band G properties will often be comfortably off, but are certainly not the “super-wealthy”. In many cases they will have experienced significant tax increases over the previous ten years. It seems particularly unfair if any doubling will be cumulative on the second home premium, which doubles (and, in Wales, triples) the cost of council tax for people with a second home. A 600% premium would be unjust, and the impact on house prices would be so severe as to almost amount to confiscation.⁶

Why is it that most of the tax increases of the last ten years have been on reasonably high earners and not on the super-rich? The obvious answer is the correct one: it’s much easier to raise large amount of money from them. There is no way to raise £4bn from the super-rich that’s anything like as easy as doubling council tax on moderately high value properties.

There are, however, relatively simple tax reforms that would raise significant sums from the very wealthy. For example: reforming capital gains tax, or making the previously-announced inheritance tax changes more effective. Or – even better – a wholesale reform of land taxation.

Methodology

We set out the methodology and limitations for our council tax calculator in our original article. The underlying sources are Department for Levelling Up, Housing and Communities data for most council tax statistics and Local Government Association data for the 2025/26 figure for each local authority.

The original calculator only applied to band H. The updated code, covering band G and band H, is available on our GitHub.

Photo of FT headline (c) The Financial Times Ltd, and reproduced here for purposes of criticism and review.

Thanks to C for assistance with the modelling.
Footnotes
1. The figures in this paragraph, and used in the calculator, are what you get when applying average house price inflation to the 1991 figures. Because they are an average, they will be wrong in many local authorities – and in London and the Southeast the bands are often considerably higher. ↩︎
2. And then presumably adjusting the local government funding formula so that the benefit goes to central Government. ↩︎
3. London and the South East have most of the Band H stock. In many other regions, almost no homes were worth £320k in 1991. So, today, there are entire local authorities with zero Band H homes. By contrast, Band G exists everywhere – it’s the top “normal” band in most of the country. ↩︎
4. See data here. ↩︎
5. In other words, a 1% rate set for a band between £1.5m and £3m will apply a 1% tax to all the value of a property that falls within £1.5m to £3m. A £1.5m property would pay nothing. A £2m property would pay £5k. A £3m property would pay £15k. ↩︎
6. There are people who choose to have two modest homes rather than one more expensive home – there is no rational reason for them to pay six times as much council tax. Any such dramatic one-off increase falls on the current owners (i.e. because there is a sudden drop in value). It impacts developers with current ongoing projects (as their expected price will suddenly fall). It deters developers from future projects (because of the possibility this will recur). The argument that the second home premium enables local people to buy is not well supported; in many cases the homes in question will still be out of reach for locals. ↩︎
2 November 2025
I’m being sued for £8m for a report on tax avoidance
I am being personally sued for more than £8m by a barrister, Setu Kamal. I believe this is one of the largest English libel claims ever made.

Mr Kamal objects to a report we published back in February about a firm called Arka Wealth (which appears to have since gone out of business). In September 2025 he tried (and failed) to obtain an interim injunction against me. Soon afterwards, we received a defamation claim.

We are not removing the report.

I won’t be commenting further for now but, in the interests of transparency, I’m publishing the court documents.

Mr Kamal’s claim is here:

We are applying to have the claim struck out as a SLAPP (and for other reasons), and, in the alternative, applying for summary judgment and security for costs. Our application is here:

This is my accompanying witness statement:

And my lawyer’s witness statement:

I’m publishing these documents in full because I believe in transparency and open justice, and there’s a legitimate public interest in both SLAPP and tax avoidance. The documents are exactly as filed and served, with only limited redactions.¹

I do, unfortunately, have to close comments on this post – but if you have any thoughts, please get in touch.
Footnotes
1. The redactions are mostly (1) for privacy, (2) redacting the content of Mr Kamal’s witness statement for his injunction, as CPR 32.12 prohibits publication of witness statements (with certain exceptions). One of those exceptions is where the witness consents, and that’s the basis on which I’m publishing my own statement and that of my solicitor. ↩︎
23 October 2025
The £2bn lawyer tax – should Rachel Reeves tax LLPs?
Doctors, lawyers, accountants, fund managers, and other high earning professionals are often members of partnerships and LLPs. They’re not employees – and so there’s no 15% employer national insurance. This creates a big tax saving. The Times is reporting that Rachel Reeves is considering changing this – and that it could raise £2bn.¹

UPDATE evening of 22 October: The Times is now reporting that, to avoid hitting GPs, the change would be limited to LLPs and would not affect general partnerships. That would be a serious error which would create unfairness and economic distortion, and open up avoidance opportunities.

Taxing people differently just because of their choice of legal vehicle is irrational – and there’s certainly a principled justification for equalising the position.² It also achieves the political aim of mostly affecting only high earners – around 0.1 % of taxpayers receive 46% of all partnership income, and 98% of the tax raised would come from the highest earning 10% of taxpayers.³

But it’s not without political cost – more reasonably paid professionals (like GPs) would also be affected: the average GP who’s a member of a partnership earns £118k, and would see their take-home pay fall by about £6k (although some of the tax revenues raised by the new measure could be used to fund an increase in GP pay).

The response of those affected, and the impact on tax revenues and the wider economy, is hard to predict. There are also practical problems, and fairness issues around where precisely the line would be drawn.

This is certainly something any Chancellor should consider – and there may be ways of squaring the circle, and raising revenue without hitting GPs or creating a series of unfair new anomalies.

The think tank/academic group CenTax published a detailed report in September analysing HMRC data around LLP/partnership taxation. The £2bn figure comes from their report – which I highly recommend. Note that their data is from 2020 – so realistically all the figures should be uprated by around 15-20% for inflation/wage growth.

The figures

This calculator shows how much additional tax would be paid by a partner if the most straightforward version of the proposal were adopted. It also shows how much of that additional tax would be saved if the partnership incorporated. The calculations are local to your PC/phone, and nothing you type is sent over the internet.

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There are worked examples in this spreadsheet.

This is all very much a quick approximation, and it doesn’t take the many complicating factors into account.⁴ Please don’t rely on it for anything more than an illustration of the impact of the proposal.

The current situation – the doctors

When someone is employed, their employer applies employer national insurance to their pay packet. So, for example, if a hospital has £118k to pay its doctors,⁵ about £16k comes out immediately as employer national insurance. The doctor only ever sees the remaining £100k – and of course pays income tax and employee national insurance on it. He takes home about £70k.

The doctor never sees that missing £16k, and might be completely unaware of it – but in the long term, evidence shows that he’s paying it (because it reduces his wage).

Now imagine a doctor who’s a “locum”. They’re often (but not always) taxed as self-employed. There’s no employer’s national insurance. So the doctor is paid the whole £118k. She’s paying more income tax and national insurance (because of the higher gross pay), but ends up taking home around £76k. Our locum is £6k better off than an employed doctor.⁶

Let’s take a third category – a GP. The £118k figure I’ve been using comes from the CenTax report – they estimate it’s the average earnings of a GP who’s a member of a partnership.

Most GP practices are set up as partnerships. A traditional partnership is just people working together in business, but many GPs use a more modern entity, a “limited liability partnership” which behaves like a company in most respects but is taxed like a partnership.

A member of a partnership isn’t an employee and (usually) is taxed in the same way as someone who’s self employed. So a GP will be taxed in the same way as the locum. No employer, and overall she’s £6k better off than an employed doctor.

This is a very irrational result.

It looks more irrational when we get to very highly paid professionals.

Highly paid partners

Most of the £2bn revenue comes from people earning far higher amounts than the £118k received by the average GP. Around 0.1 % of taxpayers receive 46% of all partnership income.

This is from the CenTax report:

Not shown on this table are much less profitable partnerships such as farm partnerships. CenTax proposes an allowance or exemption that prevents them being affected.

The greatest number (but not the highest earners) are solicitors. CenTax reckons the average income of solicitors who are partners/members of LLPs is £316,000.⁷

A solicitor whose gross income is £316k currently takes home about £180k. If his income was subject to employer national insurance, he’d take home £158k.⁸

This is a very big difference. His effective tax rate (i.e. overall tax divided by overall income) has gone up from 43% to 50%. His marginal tax (i.e. the % tax they pay on the next pound he earns) has gone up from 47% to 54%.⁹

We see more dramatic effects if we go to the largest law firms, where many partners earning well into seven figures.

A partner earning £2m currently takes home £1,072k. If employer NICs applied, she’d take home £934k – meaning £138k more tax. Her effective tax rate has gone up from 46% to 53% and her marginal tax rate is now 54%.¹⁰

This puts our £2m partner in the same position as (say) a trader at a bank where their salary and bonus pot are together £2m. Previously she paid less tax; now she pays the same.

An important point: the reason law firms are usually structured as partnerships is history rather than tax. Until relatively recently, solicitors were required to practice as partners or sole practitioners. Firms weren’t able to become companies until 1985. Even today, most of the big firms aren’t in practice able to incorporate because, whilst it would be permissible for their English lawyers, it’s not permitted for many of the foreign lawyers they practice with.

Similarly, auditors (and thus many accountants) historically had to structure as partnerships, and still do in some countries.

However many professionals absolutely do structure as partnerships for tax purposes. Most fund management businesses – private equity and hedge funds – are structured as LLPs rather than companies. The main, and perhaps only, reason for this is tax. Other businesses are in the same category, e.g. some estate agents and architect firms.

According to CenTax, the average member of a financial services partnership earns £675,000. There will be some earning ten or twenty times this figure. Someone earning (say) £6m would pay £414k more tax if employer national insurance applied to their pay.

The arguments for and against

There are several obvious arguments in favour:
- If the Chancellor is to stick to her fiscal rules then, absent very large spending cuts, she needs to find additional tax revenue. This is a relatively easy way of taxing high earners.
- It’s in principle correct that everyone who makes their living from work should be taxed the same way.
- This are complex rules to stop people disguising employment as LLP membership. Those rules could now be abolished.¹¹
CenTax estimated that imposing employer national insurance on partnership members’ pay would raise around £2bn. Their analysis seems sensible to me – although it’s based on 2020 numbers so the figure today would be around 15-20% higher.

There are, inevitably, several arguments against.

Consistency – LLPs

The second Times article suggests the measure would only apply to LLPs, and not traditional partnerships. That seems hard to justify. One of the most profitable law firms in the country is structured as a traditional partnership, not an LLP. Can it be right they pay less tax because of this historical accident?

The original CenTax proposal looked at taxing partnerships generally; restricting any change to LLPs would be a bad mistake. Any rule which doesn’t apply to all professional tax-transparent vehicles will be unfair, economically distortive and – inevitably – gamed. We could expect large-scale avoidance, as firms seek to convert into either general partnerships or (more likely) foreign entities that have many of the benefits of LLPs but aren’t subject to the new tax rule. If ever there were sectors willing and able to structure their way out of a tax they don’t those sectors would be it’s accounting firms, law firms, and fund managers.

The more general consistency problem

More fundamentally: some lawyers practice as individuals. They wouldn’t pay employer NICs. That seems odd. If LLPs/partnerships result in much more tax than sole traders, we’ll (at the margins) see some people breaking away from firms to set up on their own. And some sole traders that would have gone into partnership, won’t.

What about barristers? Junior barristers at leading commercial barristers’ chambers can earn up to £360,000 in their first year. Some senior KCs earn ten times that. Barristers aren’t (usually) members of partnerships; but it’s hard to see why a barrister who earns £2m should pay less tax than a solicitor who earns the same.

This becomes quite hard to fix unless employer national insurance (or something equivalent) is applied to all the self-employed (and see further below).

Behavioural response

It’s easy to calculate the “static” revenue from a tax change – it’s just multiplying numbers together.

Estimating the actual revenue is much more difficult, because you have to take into account the “behavioural response”.

Here there will be several:
- Some people will move from LLPs and partnerships to become self-employed consultants (and escape the new tax). Sometimes this would be real. Sometimes this would be artificial avoidance – one could imagine a GP practice or law firm splintering into multiple “consultants” all claiming to be self-employed. New anti-avoidance may be required on top of existing rules.
- Large law firms practice all over the world. In many cases it’s possible to do much the way work in Dubai as in London. So (at the margins) we will see some members of these firms move from London to Dubai to escape the tax. And not just Dubai – for various reasons, lawyers in many European countries pay lower tax than lawyers in the UK.
- Some people will work less, because they are less motivated. Conversely, others will work more, because they need to work more hours/years to earn the same amount.
- Some firms will restructure into companies. The partners/members will become shareholders. On the fact of it this saves just a small amount of tax – my calculations suggest an average GP could save £3k, and even a £2m law firm partner would save only £13k. However in practice it may save more than this, as the companies could retain and reinvest profit. That may even have business and economic advantages.¹²
- And another response that won’t impact revenue: some of the incidence may be borne by firm employees, e.g. with employed lawyers receiving smaller pay rises than they otherwise would, and some by clients, in the form of increased fees.¹³
CenTax used historical “elasticity” data to estimate that imposing NICs on partnerships would cause a loss of tax revenue equal to about 20% of the “static” estimate. That feels in the right range.

The question is whether there would be a wider impact on UK law firms, fund managers etc, beyond just the loss of tax revenue, and perhaps a wider impact on the City and the economy as a whole. I don’t know the answer to that.

Complication

There will be, inevitably, complications in how this works. For example:
- Some of the return received by partners represents remuneration for their labour. Some is a return on capital. There would need to be some mechanic for differentiating between the two, without allowing people to over-allocate their remuneration to a capital return. The return on capital is currently usually quite small; that in part may reflect low risk, but may genuinely be less than it should be.
- Many of the largest law firms are single partnerships/LLPs, with partners/members all over the world. The new rules would have to only apply to distributions to UK partners/members – and sometimes particularly for US firms) the distributions are significantly of foreign profits which are taxed abroad and not here.¹⁴
- Fund management LLPs often stream fund returns as well as what is realistically labour income. Differentiating between the two may not be straightforward.
How a messy compromise could produce a principled result

I am not very good at politics, and try not to make political predictions.

That said: it seems to me there are likely to be few people opposed to the idea of increasing the tax of millionaire lawyers. There may be rather more people opposed to the idea of increasing the tax on GPs. A £6k cut in take-home-pay is likely to go down badly with GPs, particularly when compared with the (net) £2,000 increase they received from the most recent pay deal.

That raises obvious political questions: but exempting doctors from any new rule would be unprincipled. The Times is suggesting that might be the direction the Government is going, but that would be a serious mistake (for the reasons noted above re. consistency).

A better answer, suggested by CenTax, is for central Government to increase GP pay, funded by the new tax measure.

Or a more principled approach – and one which avoids revisiting the doctors’ pay deal – would be to create a per-partner/member exempt amount, set at a level so doctors pay little or no additional tax.

If the exempt amount were set at the average GP partner pay of £118,000, I estimate this would reduce the yield from about £2bn to about £1bn (calculation on the second tab of the spreadsheet).¹⁵

That kind of messy compromise could actually prepare the way for the most principled change of all: applying employer national insurance to all forms of work, employed and self employed. That’s clearly out of the question (at least politically) if we’re talking about the moderately paid self-employed (e.g. tradespeople). But if it’s done with an exempt amount, then suddenly it seems more realistic. We could apply to other forms of income too, such as rent.

And all this has the laudable side-effect of dealing with the consistency problems identified above. It might even pave the way towards abolishing national insurance altogether – the first step towards abolition is ensuring that everybody pays it.

Obvious disclosure: I was a partner in a large law firm. I have no economic interest in any law firms today, but it goes without saying I am going to be influenced by my background.

Front page © News UK / The Times, and excerpted for purposes of criticism and review.
Footnotes
1. This is just the latest in a long series of articles reporting on Budget speculation. The speculation is damaging and I wish whoever in the Government is responsible for the leaks would stop. ↩︎
2. Historically, many people have justified the lower tax on self employed and partners by saying they take more entrepreneurial risk than the employed. That is sometimes true – but not always. An employee in a small start-up is probably taking more entrepreneurial risk than a partner in a large accounting or law firm. And someone starting up a new business through a company will usually be taking much more risk – but their overall effective rate of tax (corporation tax and income tax) is usually much higher than that of a partner in a firm. ↩︎
3. See page 3 of the CenTax paper. ↩︎
4. Such as: student loans, childcare subsidies, pensions, return on capital – there are many more. ↩︎
5. Of course I’m simplifying; there are many other costs of employing people, not least pensions – but the conclusions are the same even if we cater for all the real-world complexity. ↩︎
6. It’s a surprisingly small difference, given that before tax she was £16k better off. The reason is the high 62% marginal rate on earnings between £100k and £125k. ↩︎
7. Obvious point: this is not the average earnings of solicitors – most solicitors aren’t partners. ↩︎
8. That’s because he is paying for the employer national insurance – it reduces his gross wage. You can see the calculations in the spreadsheet. ↩︎
9. A pedant might say that the employer national insurance isn’t his tax. That’s true in a pure legal sense – it would be the partnership paying the tax. But realistically, and in economic terms, it absolutely is the tax of the partners. ↩︎
10. The real rates may be higher than this – law firms often have significant non-deductible expenses, which tend to increase the effective and marginal rates beyond what one would expect. ↩︎
11. On the other hand there would need to be new rules differentiating between professional partnerships and other partnerships, e.g. passive investment partnerships. ↩︎
12. As partnerships/LLPs can’t reinvest profit without creating “dry” tax hit for partners. ↩︎
13. I suspect these effects will be small for law firms, given the very international environment they operate in. Associate remuneration has in recent years been heavily driven by the level of associate remuneration in the US; that dynamic seems unlikely to change. Increasing fees may be difficult for areas of work where English lawyers can advise from outside the UK. ↩︎
14. One solution might be to make the tax apply at the level of UK resident partners/members, so completely differently from normal employer’s national insurance. ↩︎
15. The disadvantage is that partnership is still a tax saving for people earning less than £118k. ↩︎
21 October 2025
Criminalising tax avoidance – I’ve changed my mind
We’ve investigated many tax avoidance schemes. None of them had any technical merit – indeed many were closer to tax evasion than tax avoidance. All of the schemes, without exception, should have been disclosed to HMRC under DOTAS – the rules requiring up-front disclosure of tax avoidance schemes. None of them were.

The whole point of DOTAS was to enable HMRC to catch tax avoidance schemes early, and then either change the law (e.g. if someone found a loophole) or challenge the scheme (if it was just hopeless). In the last fifteen years, the landscape has changed dramatically. Almost all tax avoidance schemes are of the “hopeless” rather than “loophole” variety. And so the only way the promoters can stay in business is by breaking the law and avoiding DOTAS.

My view is that many promoters are criminals, but criminals who are very hard to prosecute under current law. My view was (and is) that the law should be changed to make prosecution a real possibility. Only then would we be able to deter the rogue promoters. My proposal was that failure to disclose under DOTAS should be a criminal offence, and I was delighted to see this adopted by the Government in the package it published back in the Spring.

Except I’ve changed my mind – following a series of discussions with HMRC and advisers.

I changed my mind partly because of two serious problems with the proposal – one that can be fixed, and one that can’t. And partly because two of the other elements in the Government’s package render it unnecessary.

I discussed these issues at the House of Lords Finance Bill Sub-Committee on Monday (starting at 07:45):

The problem we can fix

Many representative bodies have complained that the proposal as it stands is likely to create a chilling effect on ordinary tax advice, or swamp HMRC with unnecessary disclosures – or both.

DOTAS is complex, and honest tax advisers – who currently “take views” that uncontroversial arrangements aren’t disclosable – won’t be able to be as relaxed when breach of DOTAS is a criminal offence. So some firms might move out of tax advice altogether – a bad thing for business and HMRC alike. Others could respond by disclosing everything out of prudence.

This is an important criticism, but one that can be addressed without too much difficulty. The answer is to create an “bona fide firm” defence to the criminal offence so that mainstream firms need have no fear that a one-off accident could result in criminal liability.

Mainstream firms look really different from the promoter firms. Mainstream firms advise varied clients doing varied things, ,and it would be exceptional for any of those things to be caught by DOTAS. The promoter firms typically run a very small number of schemes (often just one), marketed in high volumes.

So we can create a defence that applies to any firm that can demonstrate that at least 90% of its tax-related business (measured by fee income) relates to bona fide tax advice.¹ Tax advice would be “bona fide” for this purpose if either it relates to an arrangement which is not properly disclosable under DOTAS, or it is disclosable but was properly disclosed.

I expect every single mainstream firm that provides tax advice, large and small, would be comfortable the defence applied to them, and so would not suffer the chilling effects that concern the CIOT.

The “chilling effect” problem is therefore not insurmountable.

The problem that can’t be fixed

The more challenging issue is that the same complexity that scares normal tax advisers will, perversely, make the actual criminal tax advisers more relaxed.

Take a look at the judgment in the Hyrax case. This was a low quality tax avoidance scheme which in my view had no reasonable prospect of success. It failed to disclose under DOTAS by running extremely poor arguments that in my view also had no reasonable prospect of success. It still took the Tribunal 56 pages to throw out Hyrax’s appeal.

The Hyrax judgment shows a KC (who I expect designed the scheme) running a long series of complex but meritless arguments. The Tribunal had no difficulty dismissing them, but arguments like these would be far harder for a jury to evaluate, and could easily create reasonable doubt. That’s particularly the case when promoters have an opinion from a KC who is willing to bless the most far-fetched arguments. Until the Bar gets its house in order, it’s going to be far too easy for a promoter to manufacture an excuse for its actions.

In the course of the recent consultation, I and other advisers spoke to knowledgeable people at HMRC, and we came away with the distinct impression it might be challenging to present any DOTAS case to a jury. We then spoke to retired HMRC inspectors with experience of tax prosecutions, and then to barristers specialising in “white collar” crime (doing both prosecution and defence work). All of them thought that prosecutions would be problematic – one barrister said the offence might be “unprosecutable”.

Our team has explored ways that the offence could be made simpler, but unfortunately none seem very workable. The various forms of simplicity we’ve considered all either risk criminalising innocent firms, or present too many loopholes for criminal firms.

So I’m disappointed to have to conclude that my basic concept of criminalising DOTAS breaches is not viable.

I’d love to be wrong, and for there to be a way to design an offence that neither criminalises the innocent or lets the guilty off the hook, but I’m not currently seeing it.

The alternative

My original thought process was that rogue promoters were breaking the law without consequence, and severe sanctions were required to stop this.

That’s still my view, but I think the same aim may now be achieved by two other measures in the Spring package:

Universal stop notices

HMRC currently has a power to issue a “stop notice” to the promoter of a tax scheme, making further promotion of that tax scheme a criminal offence.² The problem is that the people ultimately behind these schemes hide themselves behind trusts, nominee directors and nominee shareholders. HMRC will issue a stop notice to one entity, and the promoter will simply move its business to another (very possibly run by different frontmen).³ This example in the HMRC consultation document is an accurate reflection of what’s been happening:

The Government is proposing to end this game of “whack a mole” with a “universal stop notice“. This would empower HMRC to issue a notice specifying a scheme; no person could then promote or enable that or any similar scheme. Anyone who did would commit a criminal offence, as would any person controlling or influencing them.

The key question is whether HMRC is able to speedily identify schemes, and HMRC and the Parliamentary drafting team are then able to craft USNs which encompass all the variations of the schemes that the promoters (who are smart and devious) will be able to come up with. If they can, then the USNs should do the job of criminalising the most significant areas of tax avoidance.

DOTAS penalties

One of the reasons promoters ignore DOTAS is that it’s hard for HMRC to apply penalties.

Under the current rules, failing to disclose a tax avoidance scheme under DOTAS can lead to daily penalties of up to £600. These penalties must be imposed by the Tax Tribunal on application by HMRC.⁴ If the failure continues, HMRC can apply again for higher “continuing” daily penalties of up to £1 million in total. HMRC cannot impose these penalties itself – each one requires a formal tribunal process. There are also smaller fixed penalties, which HMRC can issue directly, for users who fail to include a scheme reference number on their returns (typically £5,000–£10,000), with a right of appeal to the tribunal.

This regime has proved weak. The tribunal process is slow and expensive, and promoters can often dissolve or re-incorporate before penalties are determined. Even when penalties are imposed, they are rarely paid – as in Hyrax, where the tribunal approved a £1 million DOTAS penalty but nothing was ever recovered. The result is that promoters routinely breach DOTAS with little real consequence.

The Government’s Spring 2025 package proposes to change this by allowing HMRC to impose DOTAS penalties directly, bringing the rules into line with other modern anti-avoidance regimes. Penalties would still be appealable to the tribunal, but HMRC could issue them immediately, without needing a prior tribunal order.

This means HMRC should be able to issue DOTAS penalties as a simple procedural step, whenever it identifies a tax avoidance scheme that is being marketed but has not been disclosed under DOTAS. The process should be much faster, making it harder for promoters to evade penalties by delay or phoenixing.

If HMRC wants to change the avoidance landscape then it will have to act aggressively, and be willing to use the joint and several liability rules to pursue the individuals behind the schemes if/when the companies fold. I also feel that maximum penalties of £1m isn’t enough – the HMRC example of a promoter making £1m in fees per month is not fictional. I would make the maximum penalty the higher of (1) £1m, and (2) 150% of fees charged.

The next step

I still think more is needed. It’s offensive to me and many other tax advisers that flagrantly doomed tax avoidance schemes are still sold at scale. It’s become a mis-selling problem as much as it is a tax problem – lives are ruined when these schemes are sold to people (often people on modest incomes).

Part of the answer is regulation (and regulation that goes further than the current Government proposal, which won’t apply to most scheme promoters). But it’s not clear that existing regulation is working. The Bar in particular has tolerated bad actors for too long. If the professions won’t regulate themselves then Government should step in.
Footnotes
1. An anti-avoidance rule may need to be added, so the defence wouldn’t be available if a firm artificially created non-DOTAS business to “swamp” its main DOTAS business. ↩︎
2. “Stop notices” were a new power granted to HMRC in 2021, with the rules now in section 236A Finance Act 2014. The effect of a stop notice is that the recipient of the stop notice mustn’t promote the specified arrangements, or anything similar to them. The stop notice also requires the recipient to provide HMRC with detailed information on its clients, and to pass details of the stop notice to those clients. ↩︎
3. In theory the existing rules should deal with that. The effect of a stop notice also applies to (amongst others) anyone who controls, or has significant influence, over the recipient of the stop notice. And if the recipient transfers its business to another person, then the stop notice applies to them too. All of this is in theory: in practice the entities tend to be offshore and highly opaque, and it is difficult or impossible for HMRC to prove the relationship between them. ↩︎
4. The reason is that DOTAS penalties are imposed by s98C Taxes Management Act 1970. Section 100 TMA provides that most TMA penalties can be imposed by an HMRC officer; but s98C is excluded from this. ↩︎
20 October 2025
Carter-Ruck enabled the $4bn OneCoin fraud. Was it a crime?
Carter-Ruck, Britain’s most famous libel firm, threatened whistleblowers, journalists, regulators and even the police on behalf of OneCoin, a $4 billion crypto-fraud. The firm played a key role in helping the fraud to continue. Did Carter-Ruck cross the line, and commit a criminal offence?

UPDATE 15 December 2025: The Solicitors Disciplinary Tribunal has just dismissed charges against Carter-Ruck partner Claire Gill. It looks like Carter-Ruck will face no consequences for having helped one of the world’s largest financial frauds.

OneCoin’s founder is now on the FBI’s Ten Most Wanted list; the rest of its executives were jailed or went on the run. Yet at the height of the fraud, Carter-Ruck was, in its own words, working to “silence the critics and ultimately the police”

This report is based on a detailed review of documents in Carter-Ruck’s files, released by the Solicitors Disciplinary Tribunal last month. The documents suggest that Carter-Ruck never knew who really owned OneCoin, or who was paying its bills. They also reveal that the firm knew OneCoin faced detailed and credible fraud allegations, knew its founder, Ruja Ignatova, had a recent conviction for fraud, knew the police suspected it was a scam – and knew all of this was making it “very difficult” for OneCoin’s business to operate. So Carter-Ruck stepped in to protect OneCoin: taking down YouTube videos and sending legal threats to journalists, whistleblowers, regulators and the police.

Carter-Ruck’s work was not incidental. It was part of the machinery that kept the fraud alive. Ponzi frauds require that the fraudsters keep the trust of their victims – and Carter-Ruck helped maintain that trust. As partner Claire Gill put it in an email to her client: “The goal of legal action is to reassure members and to send a strong PR message”.

There’s nothing unusual or improper about lawyers acting for criminals. It’s fundamental to our justice system that lawyers defend people accused of crimes, even if they suspect their clients are guilty. What Carter-Ruck did was different: they actively helped criminals to continue their fraud. That’s why the Solicitors Disciplinary Tribunal ruled that Carter-Ruck was instructed in furtherance of a fraud.

Carter-Ruck have said – correctly – that their firm isn’t covered by anti–money-laundering regulations. But the Proceeds of Crime Act (POCA) applies to everyone – regulated or not – and makes it a criminal offence to help someone retain the proceeds of crime, or to receive money that comes from crime, if you suspect that’s what’s happening.

Carter-Ruck surely didn’t know they were facilitating a fraud – but they should have suspected it.

And if Carter-Ruck did suspect their actions were helping a fraud, that raises the real possibility that they committed these offences.¹ If, on the other hand, Carter-Ruck genuinely didn’t suspect fraud, when so many other people did, that raises serious questions about their judgment and competence.

The Solicitors Regulation Authority is prosecuting the Carter-Ruck partner, Claire Gill, for an “improper threat of litigation“. We believe there is a more serious case to answer: that Carter-Ruck may have committed a criminal offence under POCA.

Carter-Ruck’s only response has been to threaten us with legal and professional consequences for reporting this story. They say we are making “baseless” and “seriously defamatory” accusations, and that we are “launching a wholesale attack on Ms Gill and this firm” based on a “highly selective, tendentious and indeed grossly distorted view of the materials”. They have not identified a single specific legal or factual error. We’ll update this report if they do.

Carter-Ruck’s client: OneCoin

OneCoin claimed to be a cryptocurrency like Bitcoin, but centralised. It wasn’t. There was no “blockchain” – OneCoin just made up prices, took investors’ money, and paid some out to other investors and kept the rest for themselves. There’s no such thing as a centralised cryptocurrency.² It was a Ponzi fraud.

The whole thing collapsed in 2017, and its executives are all now either in jail or on the run. Around $4bn was stolen from millions of investors, across 125 countries. Carter-Ruck’s client, Ruja Ignatova, is one of the FBI’s ten most wanted fugitives, with a $5m reward for information leading to her arrest.

The BBC article, podcast and Jamie Bartlett’s book are probably the best sources for the history of OneCoin. Jen McAdam’s book is also excellent.³ There is an excellent analysis of Ponzi schemes and their history in The Ponzi Puzzle by Tamar Frankel.

After the Solicitors Disciplinary Tribunal (SDT) accepted the case against Carter-Ruck partner Claire Gill, we and a consortium of media and free speech organisations were able to obtain complete disclosure of the SDT documents. Those documents reveal the inside story of Carter-Ruck’s relationship with OneCoin⁴, and form the basis of this report.⁵

Carter-Ruck never knew who owned OneCoin

When the Solicitors Regulation Authority (SRA) started investigating Carter-Ruck, Carter-Ruck sent this explanation of how they started acting:

This misses out an important detail.

Carter-Ruck knew they were acting for their human client, Ruja Ignatova, and obtained copies of her passport and utility bill. However Carter-Ruck were also acting for the OneCoin companies – and Carter-Ruck appears to have known little or nothing about them.

“Know your client” (KYC) is the procedure which law firms, banks and many other types of businesses follow to identify their clients – both individual clients and corporate clients.

Carter-Ruck’s standard KYC form required Carter-Ruck to receive accounts or certificates of incorporation from their corporate clients. Carter-Ruck appears to have received no such documents from any OneCoin companies. Carter-Ruck asked in August 2016; received nothing, and just continued to act.

Carter-Ruck asked for the information again in October 2016 and again in December 2016; the next month they were finally sent this:

The first document shows OneCoin Ltd was incorporated in the UAE and had two unknown Panamanian individuals as shareholders. The second shows OneLife Network Ltd was incorporated in Belize, with no information on the shareholders.

We would expect most law firms’ KYC processes would have regard this as a red flag. Belize and Panama are not normal business locations for European businesses:⁶
- Why would a UAE company be owned by two people in Panama? Panama was put on the Financial Action Tax Force “grey list” in 2014. It had only just come off in 2016 when the Panama Papers were published, showing extensive abuse of Panamanian shells for secrecy and illicit flows. In November 2016, the OECD Global Forum rated Panama “Non-Compliant” with international standards of transparency and exchange of information for tax purposes.
- In 2013, the Caribbean Financial Action Task Force (CFATF) determined Belize had made insufficient efforts to improve its compliance, anti-terrorism and AML regimes. In 2015, the US listed Belize as a “jurisdiction of primary concern” with insufficient money-laundering controls. That same year, the US accused a major Belize bank and service provider of facilitating US tax evasion for a decade.
This was, however, more suspicious than merely companies and shareholders in high risk jurisdictions.

The two listed Panama shareholders, César Degracia Santos and Marisela Yasmín Simmons (now Simmons Hay), were readily identifiable as corporate services providers. In other words – they were fronting for the actual, unknown, owners of the company.⁷ The use of nominee shareholders in this kind of context is usually suspicious⁸, and that’s particularly the case given that at the time the official position of the Panama authorities was that the law did not permit a Panamanian person to act as nominee shareholder for another.⁹

It would have been usual practice for most law firms to speak to Messrs Santos and Simmons, to see who they were acting for. At that point, the firm might then have discovered that Santos and Simmons no longer owned OneCoin Ltd. There are documents which appear to show that by that time OneCoin Ltd had been sold to an Emirati royal in consideration for a huge number of Bitcoin plus the ownership of a bank.¹⁰

It would have been good practice for Carter-Ruck’s KYC processes to check their new client had audited accounts. In 2015, OneCoin claimed it had been audited by a firm called Semper Fortis.¹¹ At that point OneCoin claimed to have a market capitalisation of around $2bn. Semper Fortis was a small and unknown firm with no obvious credentials. As at January 2016, its website consisted of one page saying “under construction”.¹² The comparison with Madoff’s obscure auditor is obvious.

There is, however, no evidence in the documents we reviewed that Carter-Ruck carried out due diligence, spoke to the Panamanian individuals, or appreciated the unusual and high risk nature of this arrangement. The 2017 risk email from Ms Gill just refers to a “complex corporate structure”. This was not a “complex” structure. It was a suspicious structure – those are two very different things.¹³

Carter-Ruck continued with business as usual – their next step was to write to the City of London police, complaining that a police officer had defamed OneCoin when he sought to protect vulnerable and impressionable people from investing in the company. The Bureau of Investigative Journalism has wrote about that episode here.

Carter-Ruck asked OneCoin for more information in April 2017, when they thought they were about to issue proceedings:

Carter-Ruck didn’t receive a response, but continued to act.

A month later, Carter-Ruck still didn’t know anything about the two Panamanian individuals, and still didn’t know who owned the Belize companies.

This is from an internal “risk report” prepared by Carter-Ruck on 25 May 2017; until this point, the risk profile had been “standard”.

We should add that we only have the documents disclosed to the SRA. There may be other documents which show that Carter-Ruck did investigate the Belize company and Panama shareholders, and did know who ultimately controlled the business. However that would beg the question: why wasn’t this mentioned in the 25 May 2017 risk report?

Carter-Ruck didn’t know who was paying them

That same risk report concludes by saying that Carter-Ruck didn’t know which company was actually paying them, and didn’t know what the ultimate source of the payments was:

Most firms would regard it as a red flag to have their bills settled by a consultant. ¹⁴At a minimum, Carter-Ruck should have checked which company was paying Mr Schneider, and what that company’s source of funds was.

Mr Schneider is now himself a fugitive.

Again it may be that other documents showed that Carter-Ruck did know who paid them; and again it is then hard to understand why that wasn’t mentioned in the 25 May 2017 risk report.

Carter-Ruck either didn’t know Ruja Ignatova had a fraud conviction – or acted anyway

Sophisticated law firms usually conduct additional checks on their clients using private databases and/or the open internet.

If Carter-Ruck had conducted such a search in 2016, it would likely¹⁵ have revealed that their client, Ruja Ignatova, had been accused of fraud, and it would likely have found a reference in the trade press to her being prosecuted.¹⁶

Ms Ignatova was convicted of fraud by a German court in April 2016, in her absence. It’s unclear when Carter-Ruck first became aware of this. The first mention in the Carter-Ruck files is on 9 May 2017, in advice from Matthew Nicklin KC to Carter-Ruck (he says the conviction means Ms Ignatova shouldn’t be the claimant in any libel action). It’s mentioned again in Ms Gill’s 25 May 2017 “risk report“.

It’s possible Carter-Ruck always knew about Ms Ignatova’s conviction. It’s possible they discovered it late. However there is no evidence that knowledge of the conviction changed the way Carter-Ruck acted – with one exception.

Carter-Ruck wrote to a Moldovan TV station on 20 October 2017, and said that there had been no criminal convictions of their clients anywhere in the world. This was arguably true; that letter said Carter-Ruck’s clients were two OneCoin companies. However Carter-Ruck were also acting for Ruja Ignatova – it may be that her name was absent from this letter because Carter-Ruck now knew she had a criminal conviction for fraud.

Carter-Ruck kept OneCoin alive

In any Ponzi scheme, survival depends on two things: a steady stream of incoming cash to stay afloat, and limiting the numbers of existing investors cashing out.

It’s all about confidence. When that ends, and participants begin demanding their money back en masse, the scheme collapses because there is no genuine underlying revenue.

So it was critical to OneCoin’s survival that its investors (in reality, victims) didn’t withdraw too much money. In Internal OneCoin documents provided to Carter-Ruck in 2016 showed that over 50% of amounts paid out by OneCoin to its investors were “reinvested” in OneCoin. At some point this became insufficient to sustain the Ponzi, so on 1 January 2017, OneCoin blocked withdrawals.

The blocking of withdrawals is often a sign of a Ponzi scheme reaching its end. At that point all that was sustaining OneCoin was faith – and the criticisms of one whistleblower, Jen McAdam, and a cryptocurrency expert, Bjørn Bjercke, became a particular threat.

We can see this in communications from a OneCoin investor/marketer called Lynn, who was desperately worried about Mr Bjercke’s criticisms. She wrote to OneCoin, in an email forward to Carter-Ruck, that “A statement or press release or company video or anything from the legal department or from Dr Ruja would definitely go a long way to stop the fear from affecting my business and the businesses of my team members”.

Lynn wrote in another email that OneCoin had to take action to help her fellow investors/victims “gain belief and trust in the company again”, and that Jen McAdam was “destroying” the business by telling people that OneCoin was a scam and was under investigation by the City of London police (which it was). Lynn’s emails became increasingly nervous – and that prompted an immediate reaction from OneCoin.

Investor anxiety was immediately channelled into legal and PR strategy – Carter-Ruck received these emails within hours.

Ms Gill wrote in response that she understood that the publicity was making the OneCoin business “difficult to operate”. Or, as we now know (and Ms Gill should have suspected) that it was risking the unravelling of the fraud.

Carter-Ruck therefore planned to commence legal action against Ms McAdam to (in Ms Gill’s words) “reassure members” and send a “strong PR message”.

The first part of Carter-Ruck’s work was investor reassurance; the second was suppressing official warnings. In September 2016 they wrote to the Financial Conduct Authority challenging the risk warning it had published on OneCoin. In April 2017, Carter-Ruck wrote to the City of London Police after a senior officer publicly warned people about OneCoin, with Carter-Ruck saying that his statements were “causing damage” to the reputation of OneCoin and to its business. A few months later Carter-Ruck escalated matters, writing to the Chairman of the City of London’s Police Committee to complain that the police were taking “active steps” to “disrupt our clients” business”, calling this “unacceptable”.

So this was Carter-Ruck’s role – in its own words, to “silence the critics and the ultimately the police”.

By silencing critics and challenging police warnings, Carter-Ruck’s actions helped OneCoin sustain the appearance of legitimacy – and with it, the flow and retention of investors’ money.

Did Carter-Ruck break the law?

We believe Carter-Ruck acted unprofessionally, indeed recklessly. The key question is whether any laws were broken.

Money laundering rules

The SRA conducted a lengthy investigation and eventually made three formal allegations against the Carter-Ruck partner, Claire Gill. One of those included undertaking insufficient client due diligence.

The allegations were considered by the SRA’s “Authorised Decision Maker” who issued a Decision Notice which determined to proceed with one allegation (improper conduct of litigation) but not the others. The allegation of undertaking insufficient due diligence was rejected because the SRA had not identified a specific obligation which Ms Gill had breached. A full copy of the Decision Notice is here – see paragraphs 20 and 21.

The reason is simple: Carter-Ruck was not AML-regulated.

A regulated firm has to conduct extensive checks to establish the bona fides of its client, and is required to report any suspicion of money laundering. An unregulated firm is subject to much weaker standards.

AML rules apply only to firms that undertake certain types of legal work: work that, broadly speaking, involves tax, finance, property or the creation/management of trusts and companies. A firm, like Carter-Ruck, that only conducts media law and related litigation is not normally required to be regulated.

Proceeds of Crime Act offences

There are, however, two important anti-money laundering rules that apply even to unregulated firms: sections 328 and 329 of the Proceeds of Crime Act 2002:¹⁷

The offence in section 328 applies if (1) a person enters into or becomes concerned in an “arrangement”, (2) they know or suspect, (3) that the arrangement facilitates, by whatever means, the acquisition, retention, use or control, (4) of criminal property by or on behalf of another person.¹⁸

Carter-Ruck’s instruction and activities for OneCoin were likely an “arrangement”.¹⁹

Whilst not intended by Carter-Ruck, objectively their involvement likely “facilitated”²⁰ the retention of criminal property (cash) by OneCoin, by silencing OneCoin’s critics, preventing its “investors” from demanding their money back, and enabling its fraud to continue. We anticipate Carter-Ruck may argue that “facilitation” only covers direct dealing in criminal property – but the words “whatever means” make this a difficult argument to sustain.²¹ ²² The Solicitors Disciplinary Tribunal has already ruled that Carter-Ruck was instructed to further a fraud.²³

The Court of Appeal held in Bowman v Fels that section 328 does not apply to the “ordinary conduct of legal proceedings”, even if a lawyer suspects that a litigation settlement may be paid from criminal property. This case is different. On the evidence, Carter-Ruck’s threats and takedowns went beyond the incidental disposition of criminal proceeds: they were used to takedown YouTube videos and suppress warnings from journalists, whistleblowers, regulators and the police, and therefore prolong the fraud. That was not an incidental consequence of Carter-Ruck’s actions, but (from OneCoin’s perspective) their purpose. Claire Gill herself said, “The goal of legal action is to reassure members and to send a strong PR message”. These were not “ordinary” legal proceedings.²⁴

There is a further point: the SRA are prosecuting Carter-Ruck for engaging in abusive litigation: if the SRA’s case is proven then this was not “ordinary conduct” by Carter-Ruck.

There have been no POCA cases on facts of this kind – but few law firms have found themselves in the position Carter-Ruck did. It’s our view, based on discussions with POCA specialists, that it’s likely the section 328 offence was committed if Carter-Ruck did suspect that it was facilitating the retention or control of criminal property by its clients.

The offence in section 329 is committed where a person acquires, uses, or has possession of “criminal property” and knows or suspects that it is criminal property.²⁵

We expect Carter-Ruck were (unknowingly) receiving criminal property – their fees were presumably the proceeds of OneCoin’s fraud (given that OneCoin appears to have had no legitimate business).²⁶

Many lawyers act for criminal clients and, therefore, must suspect that the fees they are receiving are criminal property. However, ordinarily, a lawyer in this position can say that they provided “adequate consideration” for the fees (by providing legal services) and so qualify for the defence in section 329(2)(c). However, section 329(3)(c) says that “provision by a person of goods or services which he knows or suspects may help another to carry out criminal conduct is not consideration”.²⁷

As a factual matter, Carter-Ruck were helping OneCoin to carry out criminal conduct: they were (unwittingly) enabling OneCoin to keep the fraud going, and retain their existing criminal property. It’s therefore our view, again based on discussions with POCA specialists, that if Carter-Ruck did suspect that this was happening, then the section 329 offence may have been committed. Even if some receipts by Carter-Ruck were shielded by the “adequate consideration” defence then others may not be. We believe that the legal analysis for section 329 is clearer than for section 328.²⁸

The critical point is therefore that both criminal offences will only apply if Claire Gill or others at Carter-Ruck suspected that OneCoin was a fraud, and suspected that Carter-Ruck’s actions were facilitating/helping a fraud.

It is important to be clear: the POCA offences will never normally apply to a lawyer acting for somebody who may be a criminal, even if the lawyer suspects the person is a criminal. In most circumstances – and in particular if the lawyer is defending the person in criminal proceedings – the lawyer is never “facilitating” or “helping” ongoing criminality. Carter-Ruck’s actions, however, were unusual. As a factual matter, they likely did help and facilitate the continuation of fraud by OneCoin. That will surely not have been Carter-Ruck’s intention – but “intention” is not the test here. “Suspicion” is the test.

Carter-Ruck appear to disagree, although they have not said why. Possibly their view is that s329 applies to a lawyer if their action is an intrinsic part of the crime itself – for example a lawyer structuring a fraudulent transaction. The problem with this is that a Ponzi fraud is all about deception and ensuring that the “investors” continue to believe their investment is real. Carter-Ruck’s actions were a critical part of that – as Claire Gill said, “The goal of legal action is to reassure members and to send a strong PR message”. Deception and reputation management were not side issues; they were the core mechanics of the crime itself – and that required Carter-Ruck’s legal threats.²⁹

Carter-Ruck may also claim that any prosecution sets a dangerous precedent – a “chilling effect” that would prevent lawyers acting in the best interest of controversial clients. It would not, for the simple reason that a lawyer in this position could simply file a DAML SAR. That is what lawyers in much less suspicious cases do frequently.

Was there a SAR?

There is a defence to sections 328 and 329 for a person who becomes suspicious that they may be dealing/facilitating dealing in criminal property – an “authorised disclosure” to the National Crime Agency – a “Defence Against Money Laundering Suspicious Activity Report“, or “DAML SAR“.

(Note this is different from an “ordinary” SAR where a firm is reporting a suspicion of money-laundering by a client or other party. A DAML SAR is where the firm suspects it may itself facilitate criminality, or receive criminal proceeds. Ordinary SARs are generally relevant only to firms undertaking AML-regulated work. Carter-Ruck was not AML-regulated – but DAML SARs are relevant to everyone.)

The NCA then has seven days in which it decides whether to grant the DAML – meaning that the person then has a defence against any accusation they have committed an offence under sections 328 and 329. Consent is deemed to be given if the NCA doesn’t respond within the seven days.

We spoke to lawyers with decades of expertise in KYC/AML/compliance roles at a variety of large and small law firms, regulated and unregulated. Their consistent view was that, on these facts, they would have filed a DAML SAR as soon as any suspicion arose, and would have considered further reports each time a new potential offence might arise (for example, before sending a letter threatening proceedings or raising an invoice).

From a risk perspective there is no reason not to file a DAML SAR if there is the slightest doubt (as, under section 338(4A) POCA, legal privilege generally does not prevent filing a DAML SAR³⁰). There are, on the other hand, very adverse consequences if one does not file a DAML SAR and an offence is in fact committed. Our contacts therefore all recalled filing DAML SARs in much less suspicious circumstances than those surrounding OneCoin. This is reflected in the high number of DAML SARs filed by law firms (of which around 5% were refused).

If Carter-Ruck did file appropriate DAML SARs, and received consent or deemed consent, then any potential criminal liability under POCA would be extinguished.

However we infer that Carter-Ruck did not file a DAML SAR, for three reasons:
- It seems unlikely that any disclosure was made before May 2017, or that would surely have been mentioned in the risk report.
- No reference to a SAR appears in Carter-Ruck’s correspondence with the SRA, even when the SRA was investigating due-diligence failures.
- When we wrote to Carter-Ruck identifying the possible offences under sections 328 and 329, their response did not mention any DAML SAR. Instead, it asserted in general terms that our legal analysis was “misguided”. It would be perverse for them not to mention a DAML SAR, had one been filed.³¹
The evidence for “suspicion” under POCA

The threshold for “suspicion” under POCA is low. The NCA says there does not need to be anything amounting to evidence.

The leading case holds that a person:

“must think that there is a possibility, which is more than fanciful, that the relevant facts exist. A vague feeling of unease would not suffice. But the statute does not require the suspicion to be “clear” or “firmly grounded and targeted on specific facts”, or based upon “reasonable grounds”.

…

the suspicion must be of a settled nature; a case might, for example, arise in which a defendant did entertain a suspicion in the above sense but, on further thought, honestly dismissed it from his or her mind as being unworthy or as
contrary to such evidence as existed or as being outweighed by other considerations”

It is a question of fact whether Ms Gill suspected that her client was in fact engaged in fraud, and whether she would be helping/facilitating that fraud.

While this legal test is subjective (what Ms Gill actually suspected), courts can infer this suspicion from the surrounding facts.

Looking at the facts in question:
- In 2016 and 2017 many people believed that OneCoin was fraudulent.
- In June 2016, an executive at Apex Fund Services acting on a fundraising saw a OneCoin email address on a document³² and, after seeing the results of a series of internet searches, he called an emergency meeting with his risk and compliance teams, and filed a “suspicious activity report” with Apex’s anti-money laundering regulator.³³
- In December 2016, the Bank of New York’s compliance team determined, on the basis of internet searches, that OneCoin was a Ponzi scheme.³⁴
- On 1 January 2017, OneCoin blocked its “investors” from withdrawing their money – a classic sign of a Ponzi scheme.
- The evidence continued to accumulate through the course of 2017.
- Here are Ms Gill’s notes of an 11 May 2017 meeting:
- The notes suggest (on page 2) that a missing blockchain is itself a crime, because it is a fraud. Then, on page 8, the notes appear to record Ms Gill saying “They will bring in blockchain -> if no blockchain -> scam -> fraud -> criminal”.³⁵
- Ms Gill at that point knew that the Norwegian blockchain expert, Bjørn Bjercke had published specific evidence that there was no blockchain (his test transaction did not appear on the purported “blockchain”). Despite repeated requests, Ms Gill had received nothing from OneCoin that rebutted this.³⁶
- So Ms Gill wrote (well after Mr Bjerke and Ms McAdam had been threatened with defamation claims) “We are not able to say what is false about the blockchain claims”.
- Soon after that meeting, on 31 May 2017, The Atlantic published a lengthy article describing OneCoin as a “criminal conspiracy” and detailing the enforcement actions that had been taken against it worldwide. The author wrote “it’s easy to see the lie in OneCoin’s fictional blockchain” which was “led and promoted by known fraudsters waving fake credentials”.
- By October 2017 there had been a series of arrests and regulatory enforcements across the world, with Ruja Ignatova herself personally charged with fraud in India.
- We now know that the City of London police had been investigating OneCoin for some time. In 2016, they warned a website not to promote OneCoin and advised a London venue not to host a OneCoin event. Carter-Ruck were certainly aware of this, because they wrote to the City of London police threatening libel proceedings and making a complaint to the Professional Standards Directorate. The police responded on 27 October 2017 in this very detailed letter from their solicitors, BLM. The letter says explicitly that police believed OneCoin to be fraudulent – that seems to be mainly based on information that was in the public domain, and that was available to Carter-Ruck.³⁷
Carter-Ruck’s last material act for OneCoin was when, on 20 October 2017, they wrote to a Moldovan TV station demanding that they “immediately and permanently delete and remove” a broadcast criticising OneCoin. They were successful – the broadcast was deleted.

The critical question is, therefore: at 20 October 2017 did Carter-Ruck “suspect” that their client was a criminal enterprise, and that by deleting criticism of OneCoin, they’d be helping/facilitating that enterprise?

The SRA themselves appear to believe that Ms Gill suspected OneCoin was fraudulent – their lawyers, Capsticks, wrote on 11 April 2025 that Ms Gill “must have known there was a strong possibility that OneCoin was fraudulent”.³⁸

Claire Gill denies she knew there was a strong possibility that OneCoin was fraudulent – this is from a response to the SRA:

However, looking at Ms Gill’s 25 May 2017 risk report, it is hard see how she could not have suspected:

It is not clear to us from this whether Ms Gill suspected her client was fraudulent or not.

Carter-Ruck say in their SDT defence that Ms Gill didn’t believe that OneCoin was fraudulent, and that “even if she had any suspicion” that her client was a fraud, she was entitled (and indeed under a duty) to continue to act for them.

These responses, and Carter-Ruck’s own contemporaneous risk report, miss the critical point: that if Ms Gill did suspect OneCoin was a fraud, and that she was helping/facilitating that fraud, then she may have committed a criminal offence.³⁹

In our view, a competent lawyer would have suspected that OneCoin was carrying out a fraud.

Holding Carter-Ruck to account

Defamation lawyers should be subject to AML regulation

There is a gap in the law. Defamation solicitors frequently act for people suspected of criminality, and their actions (if successful) will often assist that criminality, but defamation solicitors aren’t subject to anti-money laundering rules.

That should change.

Everyone accused of a crime is entitled to legal representation in their defence. But someone accused of an ongoing crime is not entitled to instruct lawyers to facilitate the continuation of that crime. Most law firms (regulated or not) screen their clients carefully so they don’t ever find themselves in that position. Carter-Ruck apparently do not – and they’re not alone. Self-regulation has failed.

And it’s also unacceptable that defamation solicitors can act for a company without knowing who owns it. In our view there is a material risk that Carter-Ruck’s clients could be controlled by criminals, sanctioned individuals, money-launderers or terrorists. On the evidence of the OneCoin documents we reviewed, Carter-Ruck makes no attempt to check, and the firm appears to believe they have no obligation to check.⁴⁰

There is an obvious solution: the money laundering regulations should be amended to include advising in relation to and conducting defamation litigation. This doesn’t require primary legislation – the relevant Minister is empowered to make regulations amending the rules.

The potential breach of POCA should be investigated

The National Crime Agency should consider whether the evidence justifies prosecuting Carter-Ruck for a breach of the Proceeds of Crime Act (unless in fact appropriate DAML SARs were filed). POCA offences are often hard to prosecute against lawyers because of legal privilege; however (as the SDT has already ruled) few or none of the key documents are privileged.

Any such prosecution would set a new precedent on the scope of a solicitor’s duties under POCA when representing clients involved in an ongoing fraud. That would be a good thing.

Alternatively, or in addition, the NCA should consider whether the evidence justifies bringing civil recovery proceedings against Carter-Ruck under Part 5 of the Proceeds of Crime Act. Those provisions apply to property derived from “unlawful conduct” – a definition that may capture Carter-Ruck’s fees. The court could order recovery unless the firm can demonstrate it acted in good faith and without notice that the money was criminal. If Carter-Ruck suspected OneCoin was a fraud, that could prove a challenging case for Carter-Ruck to make.

Whether or not the NCA act, a breach of POCA is a breach of the SRA Code of Conduct (as is any criminal offence committed by a solicitor). The SRA should considering adding an additional charge to their prosecution of Ms Gill.

Carter-Ruck’s response

Carter-Ruck’s defence relies heavily on an opinion by Timothy Dutton KC obtained by Carter-Ruck which says that AML-unregulated solicitors have no due diligence obligations, and are required to act even if a client’s position is factually not credible.

Mr Dutton is unable to identify (in paragraph 44.1) a difference in principle between a solicitor in a SLAPP case and a criminal defence solicitor. This shows a remarkable failure of imagination. The correct comparison is not with someone defending a bank robber after the event – it’s with a solicitor threatening witnesses with defamation claims if they report that a robbery is happening. A criminal defence solicitor is not facilitating an ongoing crime, but a solicitor in Carter-Ruck’s position is (and was).

Mr Dutton’s opinion also fails to address the Proceeds of Crime Act. A breach of POCA, as with any other criminal offence, is a breach of the SRA Code of Conduct. That is the case regardless of whether or not the breach is prosecuted.

We expect Mr Dutton’s opinion reflects his instructions from Carter-Ruck. The document illustrates a familiar truth – that a KC’s opinion commissioned by a party with a particular interest is valuable chiefly as advocacy, not as analysis.

Carter-Ruck’s position seems to be that a lawyer can facilitate conduct they suspect is illegal, as long as they don’t know it’s illegal. That is an extreme position, and one that’s contrary to accepted legal norms.

Carter-Ruck also claim to have relied on advice from Hogan Lovells that OneCoin was not a pyramid scheme. That is no defence at all. OneCoin was a fraud, and that is not something which the Hogan Lovells opinion considers (or could have considered). As Richard Moorhead has written, the stated reliance is merely a way of avoiding responsibility. We will be writing further about the Hogan Lovell opinion.

Our correspondence with Carter-Ruck

We wrote to Carter-Ruck saying that the documents appeared to show an absence of KYC procedures and, if that was correct, there was a high risk Carter-Ruck were facilitating other frauds and/or acting for companies controlled by criminals or sanctioned individuals.

Here is Carter-Ruck’s reply:⁴¹

Carter-Ruck say that the absence of adequate due diligence has never formed part of the SRA’s case. That’s correct, because whilst the SRA initially alleged a due diligence failure, it was unable to identify a professional obligation Carter-Ruck had breached. That in no sense prevents us from conducting an independent analysis.

Carter-Ruck claimed in their reply that our “misguided” assertions were made because the documents available to us were only a partial record of what happened. We reviewed the documents exhaustively. We acknowledge that this is only part of Carter-Ruck’s client file, and there may be other documents that contain relevant information. It is, however, reasonably clear that Carter-Ruck never knew who their client was – the 25 May 2017 risk report says so.

We therefore asked Carter-Ruck to respond directly to the accusation they never investigated the true ownership of OneCoin:

Carter-Ruck didn’t reply.

We wrote again, identifying the potential offences under POCA.:

Carter-Ruck responded with a letter that had failed to specifically address any of the points we had made, and instead threatened us with legal and professional consequences for reporting this story. The letter says we are making “baseless” and “seriously defamatory” accusations, and that we are “launching a wholesale attack on Ms Gill and this firm” based on a “highly selective, tendentious and indeed grossly distorted view of the materials”:

Carter-Ruck add that “the money laundering offences in sections 328 and 329 of the Proceeds of Crime Act 2002, which have been the subject of careful and extensive interpretation by the courts, do not have the application here that you apparently suggest, for reasons that ought to be clear to you”. We do not know what those reasons are; neither do the POCA specialists we spoke to.

We pointed out that Carter-Ruck’s letter failed to identify any specific factual or legal error, and gave them another opportunity to reply. They did not take it:

Carter-Ruck helped facilitate a major crime. They didn’t know that’s what was happening, but they should have suspected it. That has to have consequences.

Thanks to T and C for the POCA and AML analysis, B, K and C for additional research, Q, A, J and L for giving the benefit of their experience in law firm AML/POCA compliance. Thanks to Helen Taylor of Spotlight on Corruption, E and N for reviewing a late draft.

Thanks to The Bureau of Investigative Journalism, The Foreign Policy Centre, The Free Speech Union and Spotlight On Corruption for working with us on the application that resulted in the publication of the full SDT document suite.

And, most of all, thanks to Jen McAdam and Bjørn Bjercke, who spoke out against OneCoin at a critical moment, in the face of intimidation and threats.

All published documents are the copyright of whoever owns them, and are published in the public interest.
Footnotes
1. Unless “DAML SARs” were filed by Carter-Ruck with the National Crime Agency – the available evidence suggests that’s unlikely, but see further below. ↩︎
2. There never was – and multiple sources attest to this being widely known in 2016. Genuine cryptocurrencies like Bitcoin rely on a blockchain which provides decentralised public verification. “centralised” systems are simply databases controlled by a single organisation. ↩︎
3. The OneCoin Wikipedia article isn’t very good – it looks like a very old article that’s been occasionally updated. It badly misreads its sources – for example claiming that BBC reporters believe Ruja Ignatova is living in Frankfurt. ↩︎
4. It is important to note that the files are the documents sent by Carter-Ruck to the Solicitors Regulation Authority as part of the SRA investigation. They are not a complete set of Carter-Ruck’s client files, and so it’s necessary to be cautious about assuming they provide a complete picture. ↩︎
5. We are looking for ways to publish all the Carter-Ruck SDT documents in the public interest; it’s 1,200 pages and we would first need to redact personal information (such as email addresses and direct dial/mobile phone numbers). ↩︎
6. With the exception of shipping businesses, which are often incorporated in Panama for “flag of convenience” reasons. ↩︎
7. As an aside, the same individuals have on occasion been involved in UK companies and limited partnerships. ↩︎
8. There are some contexts where it is not suspicious at all (such as some UK corporate groups with legacy issues around plc two shareholder rules). However having a business held by nominee shareholders is very unusual. ↩︎
9. See page 46 of the November 2016 OECD document. ↩︎
10. This is based upon documents published by lawyer Jonathan Levy showing that OneCoin Ltd was sold to an Emirati royal, Sheikh Saoud bin Faisal Al Qassimi for 230,000 bitcoin at some point in 2015, with the sale completed in February 2017. 230,000 bitcoin was worth $58m at the time – it’s now worth $26bn. There is a wider suite of documents which appears to show Mr bin Faisal agreeing to sell Ms Ignatova a bank. The status and provenance of the documents is unclear; and note that the 2015 refers to “OneCoin Company Ltd” (which doesn’t appear to ever existed), but the other documents to the actual entity, “OneCoin Ltd”. Mr bin Faisal denied any involvement in a communication to the BBC in 2022. As of September 2025, there appears to be ongoing litigation by Mr bin Faisal against Messrs Santos and Simmons – see the top of page 8 of the September 2025 Gulf Times. ↩︎
11. OneCoin published a video of Ms Ignatova interviewing the senior partner of Semper Fortis. It comes as no surprise that the audit turned out to be have been written by OneCoin staff. Given Semper Fortis claimed to have audited a blockchain that did not in fact exist, it seems a fair assumption that they were involved in the fraud to some degree. However we are unaware of It is unclear what happened to Semper Fortis and ↩︎
12. That remains the case today – although the website still hosts some documents. ↩︎
13. One lawyer who reviewed a draft of this report wondered if, when Ms Gill wrote “complex”, that was actually a euphemism for “suspicious”. That is possible. ↩︎
14. See, for example, paragraph (i) on page 37 of fa. ↩︎
15. We say this because we have spoken to three KYC specialists at law firms, and they all believed it was likely that their usual “open source” searches would have identified these articles. ↩︎
16. This is possibly referred to obliquely in the initial Q&A document OneCoin sent to Carter-Ruck. ↩︎
17. The image and link are to the sections as they were in 2017. ↩︎
18. Note that section 328(3) disapplies liability where the defendant knows or reasonably believes the relevant criminal conduct occurred overseas and was lawful there. Given that the underlying wrong is fraud (criminal in the relevant jurisdictions) and the acts complained of occurred in/targeted the UK (including UK regulatory warnings), the exception has no realistic application on these facts. ↩︎
19. An “arrangement” goes beyond a series of unilateral acts. The retainer, coordinated PR-legal strategy, and liaison with overseas lawyers together evidence a concerted plan, not isolated letters. See the Supreme Court’s treatment of “arrangement” in R v GH. ↩︎
20. Section 328 requires that the arrangement “facilitates” (by whatever means) retention/use/control; it does not require “but-for” causation or a substantial contribution. The Supreme Court in R v GH analysed s.328 on the basis that arrangements that make it easier to retain/control tainted money fall within the provision. Carter-Ruck’s litigation/takedown strategy (FCA notice, TV broadcast) had that effect. ↩︎
21. Note that R v Geary [2010] EWCA Crim 1925 is authority that the “criminal property” in question must already exist (and represent the proceeds of crime) at the time of the alleged offence. So if Carter-Ruck enabled OneCoin to defraud more investors then that might not be within s328 – although on these highly unusual facts we don’t believe that is entirely clear. However we believe it is reasonably clear that Carter-Ruck enabling OneCoin to retain the proceeds of previous frauds is within s328. This point therefore slightly narrows Carter-Ruck’s exposure, but only slightly. ↩︎
22. Carter-Ruck successfully forced the Financial Conduct Authority to take down its warning notice. They worked with a Norwegian lawyer (since struck off) to bring a lawsuit against a Norwegian cryptocurrency expert, and Carter-Ruck threatened a Scottish whistleblower with a libel action. These tactics appeared to have successfully silenced OneCoin’s critics. Carter-Ruck also sent letters to the police threatening defamation proceedings after the police warned off various third parties from dealing with OneCoin. This likely enabled the fraud to continue longer than it would – why else would OneCoin have instructed Carter-Ruck? – and therefore minimised “investor” withdrawals and facilitated retention of the proceeds of the fraud. ↩︎
23. SDT findings are not dispositive. The SDT applies the civil standard and addresses professional misconduct, not criminal liability. We rely on its findings as context that supports (but does not prove) the contention that Carter-Ruck was hired by OneCoin to further its fraud; however it is not clear to us how anybody could reasonably reach a different conclusion. ↩︎
24. We anticipate Carter-Ruck may take an absolutist view of “ordinary legal proceedings”. We believe such an approach is not supported by either Bowman v Fels or the statutory language of POCA. See page 91 of the Legal Affinity Group’s guidance for an example of where litigation is not “ordinary”. ↩︎
25. The overlap between sections 328 and 329 was confirmed in R v GH: s328 targets facilitation by arrangements, while s329 targets receipt or use of the criminal property itself. Both may apply on the same facts if the solicitor both arranges and accepts payment. ↩︎
26. It is not necessary to prove the specific details of the crime that gave rise to the property – the accepted history of OneCoin gives rise to an “irresistible inference” that it could only have been derived from crime – see R v Anwoir [2008] EWCA Crim 1354). ↩︎
27. Note that in R (World Uyghur Congress) v NCA [2024] EWCA Civ 715 the Court of Appeal emphasised that the adequate-consideration defence is narrowly confined to s329 and does not spill over to s328. See commentary from Skadden and the Bar Council. ↩︎
28. Following WUC, courts caution against treating adequate consideration as “cleansing” criminal taint for other offences. While our s329 analysis focuses on receipt/use/possession of pre-existing criminal property, follow-on handling (conversion/transfer) may still engage s327 absent Bowman protection. See the WUC Court of Appeal judgment and practitioner commentary from Slaughter and May and Mountford Chambers. ↩︎
29. In other words, in a Ponzi, suppressing warnings and reassuring “members” is the mechanism by which existing proceeds are retained and further payouts avoided. The legal relevance flows from s328’s breadth (“by whatever means”) and R v GH’s focus on arrangements that ease retention/control of tainted funds. ↩︎
30. By contrast, for ordinary SARs (not seeking a DAML), legal professional privilege remains a bar to disclosure unless the iniquity exception applies. That exception only arises where, on the balance of probabilities, the communication itself was made in furtherance of a crime. By comparison, the threshold for filing a SAR is merely a suspicion, a much lower standard. In practice, that creates a tension: a solicitor may suspect criminality (triggering a potential duty to report) but still be prohibited from making a SAR because privilege has not been displaced on the higher balance-of-probabilities test. That can result in the firm having to cease to act – a very serious step. This is why most firms are so careful to check their clients before accepting an instruction. ↩︎
31. It could be an offence to disclose the existence of a DAML SAR if that prejudices an investigation; it is reasonably clear that the time for such considerations is well past. ↩︎
32. It is noteworthy that the supposed client initially hid the involvement of OneCoin in a transaction – an accidentally included email address tipped off the executive to OneCoin’s involvement. There is other evidence that those laundering money for OneCoin took great care to keep OneCoin’s name out of documentation, because they believed any involvement of OneCoin would cause AML checks to be failed. ↩︎
33. This is from Paul Spendiff’s testimony at Mark Scott’s trial for money-laundering. We can’t find a primary source, but there is a good summary in this Twitter thread (unrolled here) and in Jamie Bartlett‘s book The Missing Cryptoqueen. ↩︎
34. See page 7 of this US civil judgment. ↩︎
35. These may well be Ms Gill paraphrasing the expected lines taken by other people, e.g. Mr Bjercke. However her awareness of the underlying logic suggests she may have been aware that fraud was more than a mere fanciful possibility. ↩︎
36. Carter-Ruck did receive a “technical explanation”, but it was apparently written by an unknown third party who had no first hand knowledge of OneCoin’s technology. It refers to OneCoin “our client” and says “we are informed that” coins are produced by a cryptographic algorithm. The author appears to have little understanding of the underlying technology, repeatedly confusing SQL (a database query language) with a database – this sentence, for example, is gobbledegook: “SQL is the database which sorted according to the coding is implemented in the blockchain and encrypted”. Carter-Ruck don’t appear to have had the technical expertise to identify the errors in the document, but did understand that the document did not actually explain how Onecoin operated. Carter-Ruck asked for a more detailed document, but never received one. ↩︎
37. Soon after this, Carter-Ruck ceased acting for OneCoin. The stated reasons were that Ruja Ignatova had disappeared, and that OneCoin had suddenly started publicising an “initial coin offering” that all the lawyers involved thought was highly problematic from a regulatory standpoint. See this final letter from Carter-Ruck. It is possible that the letter from the police was an additional, unstated, reason for Carter-Ruck to finally pull back. ↩︎
38. i.e. because “strong possibility” is a higher bar than “more than fanciful”. ↩︎
39. Unless in fact appropriate DAML SARs were filed. ↩︎
40. Noting again that we do not have the complete Carter-Ruck files; the documents we have reviewed seem inconsistent with the possibility that at some point proper KYC was conducted, but we cannot be certain of this. ↩︎
41. We are excerpting these responses; the rest of their email relates to another matter which we will be reporting on shortly. ↩︎
19 October 2025
Could we have stopped Revolut’s founder from leaving the UK?
Nik Storonsky, the billionaire founder of Revolut, has reportedly left the UK and become tax resident in Dubai – a move that could save him more than £3 billion in UK capital gains tax. His departure raises a larger question for the UK tax system: could we have stopped him leaving? Either with the carrot of a more competitive tax system, or the stick of an exit tax?

The £3bn exit

As reported, Nik Storonsky, the founder of Revolut, updated a Companies House entry to show his residence shifting from the UK to the United Arab Emirates.

Revolut is expected to list in the near future, with the most recent funding round suggesting its market capitalisation would be around £55bn. Mr Storonsky owns about 25% of the business – so his stake is worth about £14bn (and potentially more under an incentive deal if the value of the business grows significantly).

If he’d remained UK resident then he would have been taxed at 24% on his capital gain when/if he sold shares – with a CGT liability of up to £3.4bn if he sold them all.¹To put this in context, that’s about a quarter of the UK’s total capital gains tax revenue in any one year.

Mr Storonsky would also have paid UK income tax at the dividend rate of 39.35% on dividends on his shares.

The UAE has no capital gains tax or income tax. So Mr Storonsky has plausibly saved over £3bn by leaving the UK.

The question is how we should think about this, and whether we should change our tax policy – either reducing tax to convince people like Mr Storonsky to stay, or creating exit taxes to make it more expensive for them to leave.

There are at least three different ways to view this – but no easy answers:

1. This shows the UK is not competitive

In a very real sense this is true. For someone expecting to make a large capital gain, or receive a large amount in dividends, the UK is completely uncompetitive against the UAE and other countries that have zero capital gains tax and/or zero income tax.

This is, however, a proposition that only a small island or an oil-rich city-state like Dubai can offer.² No large developed economy has zero income tax or zero CGT – it can’t be done.

Merely cutting our income and CGT wouldn’t change the dynamic – we’d have to match (or almost match) the UAE’s proposition.

Could the UK abolish CGT?

Capital gains tax is expected to raise £20bn in 2027/28 – a substantial sum. There would undoubtedly be dynamic effects from abolishing the tax – abolition would cost less than £20bn, as increased economic activity caused additional revenue from other taxes.

In the short term these effects would be very large, as people who’d sat on assets with large unrealised gains took the opportunity to dispose of them. However the evidence suggests that there would be very limited positive effects beyond this.

The key reason is that UK assets are mostly held by institutional and foreign investors who aren’t subject to UK CGT. The wealthy generally diversify their holdings, and so only a small proportion of their assets will be UK assets. This puts a low cap on the ability, even in principle, of capital gains tax policy to materially impact the UK economy.³

Another reason: the rate of capital gains tax is too low to have large incentive effects. If the rate of capital gains tax was 98% (say) then a rate cut absolutely would pay for itself, but a rate of 24% means that is very unlikely.

So there’s limited upside. There is, however, a considerable downside to abolishing capital gains tax, aside from the c£20bn of immediately lost revenue.

Without CGT, people have a huge incentive to avoid tax by shifting what is really income into capital gains. The Beatles did it in the 1960s. The wealthy continued to do it in the 1970s (which is one reason why those apparently high 98% income tax rates in fact raised little). Private equity firms do it today. There’s lots of evidence that changes to CGT rates exacerbate these effects, and CenTax has plausibly estimated that abolishing CGT would reduce income tax revenues by between £3bn and £12bn.

Many economists therefore believe that capital gains taxes shouldn’t exist in principle, but have to exist in practice to protect income tax.

Those (non-tax haven) countries that don’t have a capital gains tax usually defend against the potential loss of income tax by creating a series of special rules that realistically amount to a rather messy and complex capital gains tax. A New Zealand law firm has written a helpful explanation of the New Zealand approach, and the title says it all: “Just admit it already New Zealand, we do have capital gains taxes“.

My conclusion: eliminating capital gains tax would cost c£25bn – about 1% of GDP, with little upside.

That’s not to say there aren’t other things we can do to make our capital gains tax system encourage investment. We could stop taxing illusory inflationary gains. We could end the anomalous and unprincipled prohibition on deducting capital losses from ordinary income.⁴

There are also other ways we could change the tax system to encourage investment; we could abolish stamp duty on shares. We could reform corporation tax. We could abolish business rates and stamp duty land tax and replace them with a modern land value tax.

However it’s doubtful that any of these would have persuaded Mr Storonsky to stay in the UK – none of them would have materially changed his £3bn capital gains tax bill – indeed the most realistic CGT reform would increase it..

Even if we reduced CGT to 5% (likely at an overall cost of £20bn+), migration would still have saved Mr Storonsky £600m of tax. I suspect most people would migrate to save £600m.

We can’t compete with the UAE.

2. This shows we should change the law and tax exits

This argument goes: it’s unfair that someone can build a valuable business in the UK, leave the UK, and then never pay tax on what is (realistically) remuneration for their work during the time they spent in the UK. “Unfair” both from a vertical equity standpoint (why should Mr Storonsky pay less tax on billions than a cleaner pays on minimum wage) and a horizontal equity standpoint (why should Mr Storonsky pay less tax than someone in an identical position who chooses to remain in the UK?).

It also seems undesirable for the UK to have a tax system that actively encourages wealthy people to leave.⁵

Many countries try to prevent these outcomes with “exit taxes”.

Typically how this works is that, if you leave the country, the tax rules deem you to sell your assets now, and if there’s a gain then you pay tax immediately (not when you later come to sell). Often you can defer the tax until a future point when you actually sell the assets or receive a dividend.⁶ And if your new home taxes your eventual sale, then your original country will normally credit that tax against your exit tax. Actual implementation is (inevitably) more complicated, but today almost every large developed country in the world⁷ has an exit tax:
- The US has an exit tax for people leaving the US tax system by either renouncing their citizenship, or giving up a long-term green card. Unrealised gains in their assets, including their home, become subject to capital gains tax at the usual rate, with deferral only available in limited circumstances – it’s perhaps the harshest exit tax in the world.
- Australia has an exit tax – unrealised gains are taxed at your normal income tax rate for that year. There is a complicated option to defer.
- Canada has an exit tax on unrealised gains; there’s a deferral option, and your home isn’t taxed at all.
- France has an exit tax at an effective rate of 30% on unrealised capital gains, with a potentially permanent deferment if you’re moving elsewhere in the EU, or to a country with an appropriate tax treaty with France.
- Germany has an exit tax approaching 30% on unrealised capital gains. If you’re moving elsewhere in the EU you used to get a deferral; from the start of 2022 you instead have to pay in instalments over seven years.
- Spain has an exit tax with a deferral option (if you’re moving within the EU or to a country which has a double tax treaty with Spain).
- The Netherlands has an exit tax on private company holdings, pensions and some other savings products, with an option to defer within the EU, and in other countries if security is provided.
- New Zealand’s quasi-capital gains tax regime is now adding an exit tax.
The only two large developed countries that don’t have an exit tax are the UK⁸ and Italy.

Exit taxes are greatly complicated by EU law, which imposes numerous (and vague) restrictions on how exit taxes can work. That facilitates loopholes – France, Germany and others are engaged in a long term battle of attrition with the EU over how far their exit taxes can go.

So one new freedom the UK has post-Brexit is the ability to impose our own exit tax that the CJEU can’t stop.⁹ ¹⁰

There are, however, some important arguments against:
- The principled argument: tax competition is an unalloyed good. People have a right to live where they wish and shouldn’t be forced (directly or indirectly) to stay in the UK.
- The practical argument: people (like Mr Storonsky) will be less willing to come to the UK if we have an exit tax.¹¹ This must be true; however when most other large developed countries do have an exit tax, it’s unclear what their options are.¹²
- A corollary of that: the existence of an exit tax will prompt entrepreneurs to leave the UK at an earlier point than they do now. Take Mr Storonsky as an example. If we had an exit tax then perhaps he would have left the UK in 2017 when the business was valued at around £50m. He would have had a roughly £3m exit tax liability which he would have deferred. Then at the eventual listing he would have made billions of pounds tax free, and then finally paid his deferred exit tax. In this scenario, the exit tax made very little revenue. We missed out on years of income tax on his remuneration and dividends. And wider consequences: Revolut would plausibly have had less activity in the UK if its founder and CEO wasn’t based here.
- A more immediate practical concern: implementing an exit tax is a high risk endeavour. If the belief takes hold that the Government will introduce an exit tax then people will leave before the exit tax bites; even speculation about exit taxes can be economically damaging. Norway recently introduced an exit tax to protect its wealth tax – and it experienced an immediate wave of exits.¹³
- An exit tax requires valuing illiquid assets like private company shares – that’s notoriously difficult and subjective. Although, unlike a wealth tax, an exit tax with deferral enables valuation with the benefit of hindsight¹⁴, and mostly won’t create liquidity issues.¹⁵
3. Losing entrepreneurs is a price worth paying

This argument goes something like:
- It’s a shame that Mr Storonsky has left the UK, but he created a valuable UK business, and that greatly benefits the UK in terms of economic growth, jobs, and (perhaps most importantly) the service Revolut provides its customers.
- Those benefits are far more important (quantitatively and qualitatively) than a few billion pounds of capital gains tax revenue. Mr Storonsky might not have ever come to the UK if he hadn’t viewed the UK as an open economy. There is evidence that “star” inventors’ location choices are heavily influenced by top tax rates.
- An exit tax would change all that. A signal that the UK no longer welcomes entrepreneurs, but seeks to trap them. Worse, it would be seen by many as retrospective taxation – they arrived in the UK expecting tax to work in a particular way, and now that changes without warning.¹⁶ People would worry about further quasi-retrospective changes.
This is a rather boring and defeatist argument for the status quo. That doesn’t mean it’s wrong.
Footnotes
1. Which he almost certainly couldn’t at the IPO. There would be a “lock-in” requiring him to hold most of his shares for a period, and then even after that it would be unwise for him to make very large disposals in a short period of time. ↩︎
2. Commentators have correctly pointed out that this isn’t quite right. Dubai was built as an oil-rich city-state, but it transitioned to other drivers of growth as its oil income diminished. Its success post-financial crisis was, however, thanks to a bail-out from oil-rich Abu Dhabi. ↩︎
3. See page 22 of the OECD report for more on this. I’d expect a larger effect in the US, where much more investment is domestically-directed by US individual investors. Also note that CGT as it applies to companies, rather than individuals, is much more economically significant. ↩︎
4. Capital losses can only be deducted from capital gains. That’s distortionary and unfair – CGT means that Government takes 24% of any gains; only fair that it should also share in any losses. 30 years ago such a change would have triggered numerous avoidance schemes generating phantom “capital losses” to shield income from tax; modern anti-avoidance rules and principles make this very unlikely to happen. ↩︎
5. There is an argument, strangely common on the Left, that wealthy people don’t/won’t leave the UK for tax reasons. The argument is refuted by the number of wealthy Brits who moved to Monaco, Dubai, etc, of whom Mr Storonsky is merely the latest. ↩︎
6. Sometimes you have to provide some form of guarantee so you can’t just promise you’ll pay in future, and then scarper ↩︎
7. The EU has discussed requiring Member States to have an exit tax, but thusfar it only has an exit tax for companies. ↩︎
8. It’s an interesting question why that is. Perhaps because the UK didn’t have capital gains tax at all until 1965 (later than most other countries. The US taxed capital gains in the same way as income, right from the establishment of the modern Federal income tax in 1913. ↩︎
9. The UK’s double tax treaties somewhat complicate the creation of an exit tax, because we often give up our right to tax non-residents on their capital gain. Solving this is in part a matter of drafting (deem the tax to apply on the last day they were UK resident) and in part a matter of overriding treaties (they’re supposed to be used to prevent double taxation, not to avoid taxation altogether). ↩︎
10. If the UK introduces an exit tax then it’s both fair and necessary that we also “rebase” new arrivals’ capital gains at the point they enter. Today, if someone arrives in the UK with unrealised capital gains and the immediately makes a disposal, the UK taxes them on all the historic gain. The flipside of an exit tax is that a new arrival should only be taxed on the gain they accrue whilst in the UK. ↩︎
11. Some would also say an exit tax would deter entrepreneurship. I am sceptical – there’s very little actual evidence that entrepreneurial activity is influenced by capital gains tax considerations. Indeed arguably it would be irrational for business formation to be influenced by CGT, given that it will usually be 10+ years between founding a company and receiving a payoff, and the CGT rules at the time of that payoff will likely bear little relation to the rules at the time the business is founded. And see page 22 of the OECD report. ↩︎
12. The current popularity of Italy amongst some high net worth individuals perplexes me. The Italian tax authorities have a reputation for acting capriciously – promises made today to entice new arrivals are unlikely to deter them from pursuing people aggressively in five years’ time. ↩︎
13. Although that was a tax on net wealth rather than uncrystallised gains – a CGT exit tax should be expected to have a less dramatic effect. ↩︎
14. Purists will say, correctly, that valuation should not involve hindsight. Realists will say it always does. ↩︎
15. “Mostly” because: what happens if I exit the UK whilst holding private shares that have just been valued at £1bn. A year later, the company goes bust. Do I have to pay £240m CGT with money I don’t have? Attempting to deal with this by permitting the deduction of future losses creates avoidance opportunities – imagine I exit the UK with £1bn of private shares, then pay myself (or a family member) £1bn dividends so the company ends up worth £0 and is wound up. Do I get to deduct that loss? It’s practically difficult for UK anti-avoidance rules to apply if all the activity in question is happening outside the UK. ↩︎
16. Realistically it has to be without warning, for the reasons set out above. ↩︎
11 October 2025
The problem with unregulated tax advisers: a scheme from Property118 that could cost clients £100k+
Most of the HMRC losses from tax avoidance aren’t from multinationals or billionaires – they’re from small businesses, who’ve often been sold disastrous schemes by unregulated advisers. It’s a mis-selling problem as much as a tax problem. This report presents one example – but the internet is full of many, many others.

The media focus on inheritance tax has created an irresistible opportunity for unregulated tax firms. One of those firms is “Property118” – they market “family investment companies” to landlords as an inheritance‑tax magic bullet. But the structure is based on a basic misunderstanding of inheritance tax, and will leave many clients with six-figure tax bills – not when they die, but now.

This isn’t the first time Property118 has been caught selling a structure they don’t understand. We’ve written about them before, which resulted in HMRC issuing a “stop notice” to require that Property118 stop promoting their “substantial incorporation” scheme.

But the problem is much wider than one firm – this structure is being widely promoted to landlords, farmers and others. As long as tax advice is unregulated, HMRC will continue to lose tax revenue to technically hopeless avoidance schemes, and taxpayers will continue to get ripped off.¹

Updated 8 October 2025 – we’ve now reviewed several sets of company articles drafted by Property118. The “growth shares” appear to have been badly mis-drafted. We’ve added a section below covering the consequences of that.

Contents
The Property118 growth share scheme Property 118 – the drafting errors Property118 – the valuation problem An example DCF valuation Other approaches The consequences for Property118’s clients The long-term consequences Is Property118 regulated or insured for tax advice?Are Property118 breaking the law?How the pros do it The problem of unregulated advisers Who should landlords turn to for advice?

The Property118 growth share scheme

The scheme works like this:
- You have (say) a £5m property rental business in a company, and you’re worried about a £2m inheritance tax bill when you die.²
- The company issues you shares that give you complete control of the company, entitle you to all dividends, and entitle you to all the current £5m capital value of the business (so-called “freezer” shares).
- The company then issues your children with shares that entitle them to all capital growth of the company over £5m – “growth” shares.
- The growth shares are put into a discretionary trust that (in practice) gives you some assurance that the kids can’t run off with the shares, lose them in a divorce, etc.
We’ve saved a copy of the Property118 family investment company guide here.

Tax advisers often caution people against using trusts, because a gift into trust creates a “chargeable lifetime transfer” – inheritance tax at 20% of the value of the property put into trust (after the nil rate band), and the trust is then liable to a 6% “anniversary charge” on its value every ten years.

But Property118 and lots of other unregulated internet tax advisers have a neat solution – they say the “growth shares” have no current value – they only entitle your children to value over £5m, and the company is currently worth £5m. So the trust isn’t taxed:

That’s clear that this is an avoidance scheme. Value supposedly vanishes from the parents’ “freezer” shares, and thus their estate, without ever appearing and being taxed in the “growth shares”.

And, like most avoidance schemes, it doesn’t work.

Property 118 – the drafting errors

The original version of this report was written assuming that Property118 would correctly draft the articles of their family investment companies and the terms of the growth shares.

We have since (8 October 2025) reviewed several sets of Property118 documentation and that assumption appears to be incorrect. Here’s an anonymised version of one set of articles:

The “Q Ordinary shares” here are the non-voting growth shares. The “A Ordinary shares” and the “B Ordinary shares” are the freezer/voting shares. There are also non-voting shares C to P which can receive dividends.

The share rights work as follows:
- The shares are specified in Article 9.2 as “Each ‘Q’ Ordinary share carries no vote nor dividend right. Each ‘Q’ Ordinary Share is entitled to participate in a distribution on a sale or winding up of the company.”
- Article 9.4 then says “In the event that the proceeds are more than £900,000 the first £900,000 shall be distributed to the ‘A’ Ordinary shareholders and the ‘B’ Ordinary shareholders in proportion to the nominal value of shares held. Any proceeds in excess of £900,000 shall be distributed to the holders of the ‘Q’ Ordinary shares in proportion to the nominal value of shares held.”
- There is no definition of “proceeds” and no mechanism for paying any sale proceeds to the Q shareholders. Obviously the company can’t do this, as it doesn’t receive sale proceeds. Often there would be “tag-along” rights, which require that minority/non-voting shareholders participate in any sale – such provisions are absent.
- Article 9.5 says “Subject to the provIsIons of the Act, the directors may, in their absolute discretion, declare final and/or interim dividends on any class or classes of shares and when so declaring may vary the dividend payable between the different classes of shares and may determine that any class or classes may receive a dividend and that another class or classes shall not, and Article 30 of the Model Articles shall be modified accordingly.”
- There are none of the usual “class rights” one expects to see to protect the interests of minority or non-voting shareholders. The only protection they have are the statutory pre-emption rule and the statutory prohibition against amending class rights without the class’s consent.
This means that the holders of the A and B shares (the parents) can ensure all rent/profit and proceeds from any asset sales are paid out on their shares as dividends. The growth shares don’t receive a penny unless the A and B shares vote to wind up the company.

The A and B shareholders could go even further, and issue an additional 10,000 Q shares to themselves in consideration for £100 of gilts.³. The original Q shares would then receive only a thousandth of any eventual winding-up proceeds.⁴

The valuation specialists were split on whether this means the growth shares have no value at all during the life of the company, or in fact have some small residual value (essentially because they are a nuisance for the A and B shareholders).⁵

However it’s clear the growth shares leap in value upon any decision to wind-up the company at a point when it has over £900k of net assets. The leap in value is a result of that decision – and the decision will reduce the value of the A and B shares, and therefore the parents’ estates. It will therefore either be a straightforward transfer of value for inheritance tax purposes, or the issue of the shares and decision to wind up will be “associated operations” with broadly the same result. In either case there would be a “lifetime transfer” for inheritance tax purposes.⁶ As the Q shares are held by a trust, it would then be a lifetime chargeable transfer giving rise to an immediate 20% inheritance tax charge (and more if the parents then die within seven years). The value-shifting rules will likely also apply and deem an immediate capital gains disposal by the parents, given they are taking an action which reduces the value of their holding.

This is all very bad result for Property118’s clients. The aim of removing value from the parents’ estate has not been achieved,⁷ and there will be an up-front IHT and CGT charge at the point value is paid out on the Q shares.

The inheritance tax and company law specialists we spoke to were split on whether the unusual terms of the Q shares are a mistake⁸ (e.g. drafted by someone who doesn’t understand how class rights work) or a (failed) attempt to find a loophole by deliberately creating valueless shares. Either way, the peculiar nature of the Q shares mean they are likely regarded as “contrived or abnormal” and therefore Property118 should have disclosed the structure under the Disclosure of Tax Avoidance Schemes (DOTAS) rules. We discuss the implications of that further below.

The remainder of this report will proceed on the basis that it was a mistake and that in at least some cases Property118’s structure has correctly drafted growth shares. The consequence of that is a worse tax result, including a large up-front tax liability.

Property118 – the valuation problem

The proposition that the growth shares have zero value is easily tested: would anyone holding them agree to sell for £1, or £1,000? Of course not.⁹

Or another way to test it: would a third party agree to buy the freezer shares for £5m, knowing there is no possibility of capital growth? Of course they wouldn’t.

The growth shares are a one-way bet: if the business increases in value, then the growth shares increase in value; but if it doesn’t then the growth shares can simply be discarded. An asset like that always has value (and always reduces the value of the freezer shares). The fact that the payoff from the growth shares is contingent on future growth doesn’t mean its present value is nil; it means its value must be discounted for risk and uncertainty.

Determining the value isn’t easy, but it’s not particularly hard either. Inheritance tax requires value to be determined by asking what a hypothetical purchaser would expect to pay in the open market. There are plenty of cases applying this principle, and it’s certainly HMRC’s approach.

There are several ways to value these kinds of shares. The most straightforward is to carry out a discounted cash flow calculation by looking at the different outcomes and weigh them by probability.

Here’s a simplified example.

An example DCF valuation

Looking at Property118’s own case studies, let’s take a property business worth £5m.

We need to start by calculating the expected value of the business after (say) ten years. Property118 say a “deliberately cautious” result would be a 6% compound growth rate:

Let’s assume there’s a 50% chance the business indeed experiences 6% compound growth each year. Then assume there’s a 25% chance the business doesn’t grow at all, and a 25% chance it grows by 8%. (It’s important to stress that this is a simplified illustrative example: a real valuation wouldn’t just pull three numbers out of the air.)

Let’s then assume value is realised on a sale/winding‑up in 10 years. That means there’s a 50% chance the business ends up being worth £9m¹⁰, a 25% chance it’s still worth £5m, and a 25% chance it’s worth £10.8m ¹¹. A weighted average¹² of those figures tells us the expected value of the business in ten years’ time is £8.4m. The growth shares will be worth that minus the initial £5m value – so the expected value of the growth shares in ten years’ time is £3.4m.

But we can’t stop there.
- The kids won’t receive that £3.4m for ten years, so we should discount the figure appropriately – money in the future is always worth less than money today, particularly if there’s a high risk the money won’t in fact be received. This is reflected in a “discount rate”. Because the growth shares are deeply subordinated and only participate in upside, their required return – and therefore the appropriate discount rate – must be higher than the expected growth rate of the underlying property business. If we use a 10% discount rate then that reduces the £3.4m figure by about 60%.¹³
- And the growth shares have no voting rights – often one would see a 10% discount for that.
- The growth shares are illiquid/aren’t marketable and (on our assumption) the holder won’t receive any return for ten years. We should apply a 25% discount for that.¹⁴
- These three factors together take the value of the growth shares to just over a quarter of their expected value in ten years’ time – £890k.¹⁵
So our conclusion is that the growth shares are worth approximately¹⁶£890k when they’re issued.¹⁷ Of course a real valuation would be much more sophisticated than this – but HMRC would expect to see a DCF valuation as part of the analysis.

We’ve put this example into a spreadsheet that you can download here.

Other approaches

There are other more sophisticated ways to value growth shares – for example treat them as a call option and use the Black‑Scholes equation. This will often result in a higher valuation than the simple approach above (although it’s more typically applied to listed than unlisted shares).

So for now let’s stick with our very simplified discounted cash flow valuation estimate for the growth shares: £890k at the point the company is established.¹⁸ The simplistic approach we took, and the lack of any real-world basis for our assumed growth figures, means that a defensible figure for a real £5m property business could absolutely be higher or lower; the point of our example is to demonstrate that it is not zero, and is plausibly around £1m.¹⁹

The consequences for Property118’s clients

That £890k value implies an unexpected up-front inheritance tax charge of £113k.²⁰ ²¹

If the taxpayer dies within seven years then there will be additional inheritance tax to pay – it’s treated in much the same way as a gift (except that up to half the tax was up-front). If the taxpayer doesn’t die within seven years then there won’t be additional inheritance tax to pay – but if the taxpayer had simply made a gift to their children then there would have been no inheritance tax on it at all.

This is all a very bad result for a structure that’s marketed as saving inheritance tax. Worse still, Property118 seem to encourage people to move into these structures and incur large capital gains and stamp duty bills, all on the promise of an inheritance tax saving.

We expect that HMRC will open an inheritance tax enquiry into anyone setting up a family investment company with growth shares that were supposedly valued at zero. HMRC will, however, not be in a hurry because of the way time limits work for inheritance tax.

Someone making a chargeable lifetime transfer is required to report it to HMRC using form IHT100 (with IHT100a where appropriate). We expect Property118’s clients won’t submit a return – that means HMRC will have 20 years in which to investigate and assess inheritance tax.²² If a return was submitted then the usual limits apply, six years if a taxpayer was careless and four years otherwise.

The worst possible result is that HMRC don’t investigate until after the taxpayer dies – their children will then have to face an HMRC investigation at the worst possible time.²³

HMRC is likely to seek to charge penalties on the basis that failing to carry out a proper valuation and/or submit a return was careless.

Property118 have variations on this structure which will likely trigger other adverse tax consequences for their clients:
- If value is shifted from founders’ shares to trust‑held growth shares via changes in share rights, the value-shifting rules can apply to deem a capital gains tax disposal by the founders. The claim in this Property118 case study that there’s no capital gains tax on the creation of growth shares is false. ²⁴
- If there’s no trust, but growth shares are issued directly to a director’s children for less than market rate, the employment-related securities rules are potentially in point.
- Property118 sometimes advise that the family investment company should issue redeemable preference shares to the founders, and that these can later be redeemed free of capital gains tax. This is incorrect. After an s162 incorporation, the capital gain on the underlying property assets is “held over” into the preference shares, so disposal gives rise to a capital gain. But that’s the best case – if it’s a partial disposal (as the case study suggests) then the clients may well be subject to income tax (and not capital gains tax) under the transactions in securities rules.
There are also potential non-tax consequences: most importantly, anyone using the structure is likely to find it much harder to obtain loan finance.²⁵

The long-term consequences

Trusts are subject to a 6% ten-yearly anniversary charge on the trust’s value above the available nil‑rate band. Property118 say this is a misconception:

There is no inheritance tax concept of “determinable value” – Property118 appear to have made it up. Even if the growth shares were hard to value, you’re still required to prepare a valuation. In reality, property is one of the easiest assets to value – much more straightforward than many trading businesses.

But at least Property118 mention the 6% anniversary charge – the 20% entry charge isn’t mentioned once in their brochure, and only incidentally on their large website.

We can estimate what the 6% ten-yearly charge will look like if we continue the approach in the DCF example above.²⁶ On that basis, in ten years’ time the company’s property would be expected to be worth £8.4m, with the growth shares worth £2.4m. The ten year anniversary charge would be around £120k.²⁷

There’s also a 6% charge on exit from the trust, broadly proportionate to the time since the last ten-yearly charge.

The other long-term consequence is that the arrangement has failed to cap the value of parents’ shares for their estate at £5m. If the property is worth £8.4m and the growth shares are worth £2.4m then it follows that the freezer shares²⁸ and voting shares are together worth £6m, not £5m. Value can’t just disappear. How can mere voting shares become valuable? Because the holder of the growth shares needs the agreement of the holder of the voting shares to release value. The higher the discount we apply to calculate the value of the growth shares, the more value we push into the voting shares.²⁹

That is a problem for the structure, because the voting shares are part of the parents’ estate. The whole point of the structure was to freeze the estate at £5m – but that ignored the power of the voting shares.

Is Property118 regulated or insured for tax advice?

Advisers like Property118 present technically wrong claims with great confidence.

The truth, however, is revealed, at the back of Property118’s brochure:

Property118 is unregulated and uninsured. They try to cover themselves by saying clients should ask their other advisers to “review and confirm” the correct legal and tax treatment. But note how the list of other advisers doesn’t include any qualified tax advisers.³⁰

That leaves a Property118 client with no recourse if, as here, the tax advice is wrong. Worse, HMRC will likely charge penalties because the client was “careless” in relying upon an adviser who said they weren’t providing definitive advice.³¹

It’s possible Property118 misunderstood the outcome of the review of family investment companies which HMRC conducted in 2020 and 2021. HMRC concluded that they didn’t see a pattern of non-compliance, and saw no need for legislation. Some people saw this as the green light to use family investment companies for avoidance. That’s a bad mistake.

Whatever the reason for Property118’s errors, they’re mistakes which we don’t believe any competent adviser would make. Even ChatGPT identifies the problem when presented with one of Property118’s case studies.³²

Are Property118 breaking the law?

In promoting the structure, Property118 may themselves have broken the law. The Disclosure of Tax Avoidance Schemes (DOTAS) rules require arrangements with a main benefit or purpose of obtaining a tax advantage to be disclosed up-front to HMRC. Property118 haven’t disclosed their structure under DOTAS; it’s unclear if they’ve ever properly considered the application of the rules.

The Property118 brochure says that DOTAS doesn’t apply because “HMRC has never issued a Disclosure of Tax Avoidance Schemes (DOTAS) reference number for FICs”. This is a sales pitch, not a legal analysis. Property118 can’t possibly know if the statement is true (only in some cases does HMRC publish avoidance scheme details). Even if it is, it gives no assurance that their structure isn’t subject to DOTAS.

We believe an actual application of the DOTAS rules shows that they probably do apply to the Property118 growth share structure:
- DOTAS applies to a structure if (broadly speaking) its main benefits include the obtaining of a tax advantage and the scheme has one or more designated “hallmarks”.
- It’s clear from the brochure that one of the main benefits is IHT mitigation.
- The inheritance tax hallmark is likely to apply – the brochure shows that the scheme’s main purposes include obtaining a tax advantage, and the creation of the “growth” and “freezer” shares, and issuance at an undervalue, are likely “contrived or abnormal” steps (although we wouldn’t say that point is beyond doubt).
- The premium fee hallmark may also apply. This is a reasonably simple structure, so when the brochure says Property118’s fees are “in the low-to-mid five-figure range”, it suggests to us that the fees in part reflect the (supposed) tax benefit.
- The confidentiality hallmark seems unlikely to apply unless there are features that are not being included in the brochure and published case studies.
It follows that the likely conclusion is that the structure should have been reported.³³

If that’s correct, then Property118 are likely to incur penalties of £600 per day, which a tribunal can potentially increase to a maximum of £1m.

How the pros do it

“Growth shares” are a real thing. They’ve been issued by companies for decades as part of employee share schemes; they are also used by properly advised family investment companies.

There are, however, two big differences between real growth shares and the scheme being sold by Property118:
- Real “growth shares” usually have a “hurdle” which is higher than the current market value of the business. They don’t entitle the holder to all value above today’s valuation of the business, but to all value above the hurdle. For example, the hurdle could be set at 25% above the current value of the business, with the growth shares entitled to all growth above (on our example figures) £6.25m. That greatly reduces the initial value of the growth shares.³⁴
- Real tax advisers ensure there’s a proper valuation of the growth shares (here’s a good guide from accounting firm Price Bailey), using the kinds of approaches we summarised above. The unregulated advisers like Property118 don’t do this because they’re salesmen rather than qualified tax advisers, and are in search of a magic bullet that takes all future growth out of inheritance tax.³⁵
There has been a surprising widespread practice of people trying to argue that growth shares with a hurdle have no day one value at all. That’s a much better structure than Property118’s but, as other commentators and advisers have noticed, it’s still not defensible (at least not without very careful and detailed valuation advice). HMRC fired a warning shot at the profession at a forum for advisers in September 2023, and we don’t expect there are many bona fide advisers still running this kind of argument.

Given the hurdle shares still have value, there are various strategies advisers use to prevent an up front chargeable lifetime transfer. Most obviously it’s making sure the economics are such that the value is less than the nil rate band. Sometimes it involves structural solutions, such as the trustees using loans to acquire the trust interest – but that gets into quite difficult territory, and potentially into avoidance, with all the consequences that follow from that.

We’re not aware of any real advisers claiming that growth shares just don’t count for purposes of the ten-yearly anniversary charge, because they “have no determinable value”. Property118 just made that up.

Given the popularity of naive “growth share” structures, it may make sense for HMRC to publish a Spotlight warning people of the risks.

The problem of unregulated advisers

The government is moving to regulate the tax‑advice market, but the scope is narrow. New rules will require tax advisers who interact with HMRC on clients’ behalf to register with HMRC and meet minimum standards from April 2026 (with a short transition). HMRC’s aim is to control access to its systems and exclude agents who fail its “Standards for Agents”.

But this regime only applies to people who act as agents with HMRC. It doesn’t cover consultancies that design and sell structures but leave tax returns and HMRC engagement to the client’s usual accountant. That means many unregulated promoters, like Property118, will likely sit outside the new registration requirement. Indeed they’ll have a competitive advantage over firms that have to be regulated.

So we’re concerned the new regulation will create bureaucracy for small firms that aren’t doing anything controversial, but won’t impact bad actors.

Who should landlords turn to for advice?

Landlords, and anyone else needing tax advice, should use a regulated firm, and only deal with regulated professionals. If you’re speaking to a salesman, with no legal or tax qualifications, then our view is that you’re making a mistake, and potentially a very expensive one.

You can check online if an adviser or their firm is regulated (either is fine). The main regulators are:
Experience is also important. We’d suggest only using an adviser who’s been practising for at least ten years, or is supervised for a senior colleague who has that experience.

Any regulated adviser should carry insurance, but it’s good to check this. Although note that the insurance does not simply pay out if something goes wrong; you would have to experience a loss, sue the adviser for negligence and win – the insurance then pays out, so you’re not limited to the funds available to the adviser/firm.³⁶

Many thanks to R for the original tip, to S for their inheritance tax expertise, and to K and F for their valuation insights.

Photo by Louis Reed on Unsplash
Footnotes
1. Note that it’s not either/or. We don’t believe any of the schemes we’ve reported on would survive HMRC challenge. However some schemes will “fly under the radar” and never be subject to an HMRC enquiry. Others will be subject to an enquiry, but HMRC will make a mistake, miss a deadline, or the taxpayer will win on a procedural point. So these schemes have two effects at the same time: loss of tax when HMRC fails to effectively challenge a scheme, and ripped off clients when HMRC does effectively challenge a scheme. ↩︎
2. That’s looking only at the company; presumably there’s also a house and other assets, probably partially covered by the nil rate bands. ↩︎
3. Gilts rather than cash so the statutory pre-emption rule doesn’t apply. It could be book tokens – any valuable non-cash consideration would suffice. ↩︎
4. If done at a time when the Q shares were valuable then this could be challenged as unfair prejudice. However, for the reasons we mentioned in the previous paragraph, it’s debatable if the Q shares can ever be valuable. A challenge seems unlikely to succeed, particularly if the new shares were issued at an early stage, when the company is still at the £900k threshold. And this isn’t a variation of class rights, so section 630 won’t apply. ↩︎
5. For example: winding-up could be more tax-efficient than paying dividends, as it enables capital gains treatment and a lower rate. So perhaps the A and B shareholders would agree to pay the Q shareholders some portion of their tax saving to entice them to agree to a compromise deal. It’s this kind of scenario which is why some of the valuation specialists we spoke to thought that the Q shares could have value in some scenarios – but not much. ↩︎
6. Section 94 IHTA wouldn’t apply because it’s a transfer of value by the A and B shareholders, not the company. ↩︎
7. Some people may object that the A and B shares are held by the parents, and they wish the Q shares to have value. That’s irrelevant for IHT purposes; the question is what value the Q shares would have in a market sale to a willing buyer. We can’t assume the parents would be doing that buyer a favour. ↩︎
8. That’s plausible; Property118’s previous tax scheme suffered from incompetent drafting – with one bad drafting error replicated throughout (we believe) all their clients’ documents, which has left those clients in a very difficult position. ↩︎
9. Even in the “mistake” scenario above, the growth shares have nuisance value. ↩︎
10. i.e. £5m x 1.06 ^ 10. ↩︎
11. i.e. £5m x 1.08 ^ 10. ↩︎
12. i.e. 50% x £9m + 25% x £5m + 25% x £10.8m. ↩︎
13. i.e. because 1/(1.10 ^ 10) = 0.39. The level of a discount rate is often a key area of dispute between taxpayers and HMRC – taxpayers arguing for a high discount rate reflecting the high risk and subordinated nature of the growth shares. HMRC responding that it’s appropriate for a relatively low-risk asset like a property rental business, where much of the “growth” is just compounding rents. The valuation specialists we initially spoke to felt that 7% was a reasonable number for this example, given that most of the capital growth would be compounding rents. Others thought a higher figure was more appropriate. We have therefore amended this report post-publication to show a 10% rather than 7% rate – the issues are the same regardless. ↩︎
14. Important not to double count here; if a higher discount factor was used which reflected illiquidity then one wouldn’t also apply an illiquidity discount. ↩︎
15. £3.4m x 0.39 x (1- 10%) x (1 – 25%). ↩︎
16. Valuation is often said to be an art rather than a science – there will be a range of possible values. ↩︎
17. We’re assuming no dividends are paid on the “freezer” shares, i.e. no “dividend bleed”. Any expected dividends would reduce the expected growth and therefore the expected value of the growth shares. ↩︎
18. Note that it follows that the “freezer shares” retained by the parents must be worth something like £4.11m – i.e. the £5m value of the property portfolio less the value of the growth shares. Property118 assume that the freezer shares must be worth £5m, but a moment’s thought shows that this isn’t correct – real estate is much less valuable if the potential for capital growth is eliminated. ↩︎
19. The discount rate has a huge impact on the result. It will reflect the level of risk in the business – the type of properties and (importantly) the level of debt/leverage. To give an idea of how the discount changes the result, on our assumptions a 5% discount rate implies the growth shares are worth £1.4m; a 9% discount rate implies they’re worth £1m. Only if the discount rate reaches an implausible 22% does the value of the growth shares drop below the £325k nil rate band, and the structure “work”. You can play with the discount rate and all the other assumptions in the spreadsheet. ↩︎
20. 20% of a chargeable lifetime transfer of £565k (£890k after deducting the £325k nil rate band). That’s assuming it’s the trustees that pay; if the settlor pays, the tax has to be grossed-up. Note that IHT will arise whether the shares are given directly by the parents to their children, or the company issues them. ↩︎
21. Another consequence: the taxpayer has used up their £325k nil rate band. The impact of this can be quite complex; there’s a 14-year look-back if a chargeable transfer into a trust is followed by a potentially exempt transfer within seven years, and then death within seven years of that. ↩︎
22. The long limit is a consequence of the very long-term nature of inheritance tax planning. ↩︎
23. If the properties have in fact significantly gone up in value then HMRC is likely to be more aggressive in pushing for higher day-one valuations. In principle valuation should not be affected by hindsight; in practice matters are less clear-cut. ↩︎
24. Although note that if there is both a CGT charge and an IHT charge then an election can potentially be made for the CGT to be “held over“, i.e. deferred until the trust disposes of the shares. So in most cases there wouldn’t be a simultaneous CGT and IHT charge on the same disposal. The potential “gotcha” for users of tax schemes is that if HMRC take years to raise an enquiry, then the taxpayer may be out of time to make an election, and so could face double taxation. ↩︎
25. Because lenders to property companies typically require share security over the property. Having split share classes, and one class held by a trust, is a practical and legal complication which many lenders will not accept. The structure is therefore likely to dramatically reduce the pool of potential lenders. ↩︎
26. i.e. if we calculate the expected value of the company after ten more years. The expected year‑20 payoff is then discounted back 10 years, then adjusted for non‑voting and illiquidity, in the same way as we valued the shares for day one. ↩︎
27. £2.4m minus £325k x 6%. ↩︎
28. As noted above, the “freezer” shares will be worth less than £5m because they are an interest in property without any upside (albeit they have some “downside protection”). ↩︎
29. HMRC are well aware of the valuation issues caused by special classes of voting shares. ↩︎
30. And when proper tax advisers have historically challenged tax planning from the likes of Property118, the response has often been derision and bullying. ↩︎
31. See the Lithgow and Anderson cases, e.g. “Nor would we expect such a taxpayer to obtain another professional opinion again unless there is reason to do so, of which the taxpayer ought to reasonably be aware, such as that any qualification put upon the advice by the firm may limit its reliability”. ↩︎
32. As an aside, it’s a very bad idea to use ChatGPT or other LLMs for tax advice, but a good idea to use them to see if a point has been missed, provided you treat all output with scepticism and check primary sources with great care. ↩︎
33. Something Property118 have misunderstood in the past is that whether DOTAS applies is separate from whether a scheme works. This scheme fails whether or not DOTAS applies to it. In principle a scheme could succeed even though DOTAS applies to it (although that would be a rare case these days). ↩︎
34. On our example numbers, a 25% hurdle would cause the initial value of the growth shares to fall by more than 50%. A 50% hurdle – an entitlement to all growth above £7.5m – could cause the growth shares’ value to fall to almost nothing. Noting again that our assumptions and valuation methodology is just illustrative, and any assertion of negligible value would likely be contested by HMRC. But it’s completely realistic that in some cases the value would end up less than the nil rate band. ↩︎
35. The brochure talks about the importance of valuation in relation to the property portfolio itself, but shows no awareness that the growth shares themselves need to be valued. ↩︎
36. A common habit of disreputable advisers is misrepresenting insurance as if it’s an automatic payout if HMRC challenge the structure. ↩︎
6 October 2025
PPE Medpro made £200m but never filed full accounts. The law should change.
PPE Medpro is the company which provided £200m of PPE to the Government in dubious circumstances, of which £122m was faulty. Reports suggest it made £65m profit – but we can’t know for sure. Its finances are a mystery, because it was allowed to file only abridged accounts.

Why? Because under UK law, PPE Medpro counted as a “small” company. The definition of “small” is a relic of a European compromise nearly fifty years ago. It looks at balance sheets and headcounts, not just turnover — meaning a firm could, in theory, book trillions in sales and still be “small.”

That’s absurd. This report sets out a simple fix: require full accounts from firms of real scale, while keeping genuine small and micro businesses out of red tape.

When a £200m company is “small”

Something’s odd about PPE Medpro’s accounts for the year it made £200m from selling PPE to the Government. There’s a balance sheet, but no director’s report and no profit and loss account. We don’t know how much revenue it received, or how much profit it made.

Why?

Because the company classified as “small”.

The intention of the small company exemption is that we shouldn’t be over-regulating small companies. That’s a perfectly rational policy. It is, however, much less rational that a £200m business also qualifies for the exemption.

But PPE Medpro absolutely did qualify, because of the strange way the small company definition works.

That’s an anomaly, but one that’s far from unique to PPE Medpro. Most of the fake companies and tax avoidance scheme promoters we’ve investigated use the same exemption. They’re not breaking the rules – the problem is that the rules are irrational.

The rules

The rules say that a company is “small” if it has any two of the following:
- a turnover of £15m or less
- £7.5m or less on its balance sheet
- 50 employees or less
It’s then not required to prepare audited accounts, or publish a profit and loss (P&L) account, showing its turnover, expenses, tax and profit.

We don’t think many people would describe a £200m turnover as “small”. But it’s the “any two” in the small company rule which is critical. In its 2021 accounts, PPE Medpro had a balance sheet of £5m¹, and three employees.² So PPE Medpro’s large turnover didn’t stop it being small, because it satisfied the other two conditions. Indeed it would have remained “small” even if it had a trillion pounds of revenue..

There are more relaxed rules for “micro” companies, who can file very abbreviated accounts. A company will be a micro-entity if it has any two of the following:
- a turnover of £1m or less
- £500,000 or less on its balance sheet
- 10 employees or less
Again, £1m doesn’t seem very “micro” – and, again, you can still qualify as a “micro” company with a trillion pound turnover, provided the balance sheet and number of employees is small.

The history

How did we end up with such a weird set of conditions for the small company accounts exemption?

Until the early 1980s, all UK companies had to file full accounts with Companies House. The Companies Act 1981, implementing an EU directive, first allowed “small” companies to file abbreviated accounts without a profit and loss account or directors’ report. Later Acts – particularly the Companies Act 2006 and subsequent regulations – progressively relaxed the rules further, introducing micro-entity and abridged accounts. Over the next few years³, requirements were loosened further so that, today, small companies can file “abridged” accounts and micro companies “micro-entity accounts”.⁴ HMRC still receives the profit and loss accounts for all companies, but Companies House does not.

Prior to Brexit, the UK wasn’t free to create its own rules for when a company could file abridged accounts. We had to adopt the small company definition which originated in Article 11 of the Fourth Company Accounts Directive (now in the EU Accounting Directive). The “two out of three” was a classic EEC/EU compromise from back in 1978, and – like many such compromises – has become badly outdated but is very hard to change.

Back in the 1970s it was reasonable to assume that large businesses had lots of staff and big balance sheets. The modern world of digital and financial companies, globalisation, contractors and intermediaries breaks those assumptions – it’s common to see trading businesses with large revenues but tiny head-counts and light balance sheets. Conversely, we often see financial businesses with large balance sheets but small revenues and head-counts. These kinds of companies are “large” by any sensible definition, but “small” by the actual definition – so they get to file abridged accounts. Only after two years of not being small are full accounts required.

This breaks the basic deal of incorporation: you receive the benefit of limited liability, but in return you disclose the key elements of your business to the world (and, in particular, to your customers and counterparties). It’s self-evidently good for business that (e.g.) someone considering contracting with a firm can immediately see its accounts online. And it’s self-evidently bad for transparency that some companies which are realistically “large” like PPE Medpro, get to shroud their affairs in secrecy.

The Government’s solution

The recent focus on anti-corruption measures prompted the last Government to pass the Economic Crime and Corporate Transparency Act. This requires that all companies have to file a profit and loss account from 2027. The concept of “abridged” accounts is eliminated, and all companies will be required to file their accounts electronically using commercial software (the current simple web-filing option would disappear).

This has caused considerable disquiet for some businesses.

There have been concerns about privacy. Trade bodies have warned that publishing even a summarised P&L could expose margins to customers and larger suppliers and weaken negotiating power. That is unpersuasive – full P&Ls were published prior to 2006, and there’s no evidence this was problematic.

There have also been concerns around cost. This is more persuasive. Companies already prepare full statutory accounts for HMRC every year as part of their CT600 corporation tax return – and most large companies will already do this using commercial software, so uploading to Companies House will simply involve pressing a button. Some small and micro companies will not; so the new rules really would mean more cost and bureaucracy.

It’s therefore easy to understand why there were reports in the press back in July that the Government may be about to scrap the changes. Nothing has happened yet – the regulations are still in place requiring full P&L to be filed by 2027.

The evidence

The conventional economic view is that financial openness promotes more efficient resource allocation – and there are a large number of studies that observed this effect in practice.⁵

But there’s also a downside. There’s convincing evidence from a pan-EU study, that requiring small companies to disclose financial accounts can (at the margin) reduce their innovation. And a recent study of German firms found that, for very small firms, the costs can exceed the benefit.

This suggests that we shouldn’t be looking for a “one size fits all” solution, but that we should calibrate different levels of reporting to different types of firm. And it’s critical that the administration is as straightforward and frictionless as possible.

A more nuanced solution

The principle is straightforward: if you want limited liability, you owe the public basic transparency. The only carve-out should be for businesses that are genuinely small – not firms turning over hundreds of millions. And even small businesses should provide basic information.

So here’s our proposal: to qualify for exemption from filing full accounts, a company could be required to meet all of a turnover, balance sheet and employee condition. The thresholds could (for example) be set at turnover of £1m, balance sheet of £1m and ten employees. Once a threshold is breached then full accounts should be required immediately, without a year’s grace period. The aim should be that a coffee shop qualifies but the likes of PPE Medpro do not.

And companies that qualify for the exemption should be required to state their turnover and profit (but no other details from their P&L). That should all-but-eliminate compliance cost, but ensure that key financial information is made available.

Finally, the threshold for mandatory audits should also be an “all” test, with (for example) all companies with turnover of £20m, balance sheets of £10m or 60 employees required to obtain audited accounts.⁶

Photo by Jakub Żerdzicki on Unsplash
Footnotes
1. Current assets £4.972m and net assets £3.890m – it’s the gross amount that “counts” for this purpose. ↩︎
2. The thresholds were lower in 2021 than they are today, but even at today’s higher thresholds, PPE Medpro would clearly be “small”. ↩︎
3. Regulations in 2013 introduced micro‑entity accounts, and regulations in 2016 created the “abridged” preparation option and “filleted” filing choice for small companies. ↩︎
4. Both with the option of omitting their profit and loss account; an option that’s almost always taken. ↩︎
5. There’s also evidence that an audit requirement reduces dividends (presumably because companies are required to be more conservative in determining whether they have sufficient profits). ↩︎
6. It seems fair to raise each of the thresholds above where they are at present. ↩︎
4 October 2025
Did Keir Starmer use a trust to avoid inheritance tax?
When Sir Keir Starmer gave a field to his parents, he used a “life interest trust”. This meant that, as its value grew from £20k to £300k, it was outside his parents’ inheritance tax estate.

UPDATE: 10am Sunday 28 September. Sir Keir just told Laura Kuenssberg that he didn’t create a trust. That is hard to understand when The Sunday Times has been asking Sir Keir about a trust for a month, and he at no point denied there was a trust. It also makes it hard to explain the form of words Sir Keir used in his letter to the Parliamentary Commissioner: “I immediately gifted the land to my parents for so long as they should live”. To a lawyer, that means a trust.

In 1996, Sir Keir Starmer bought a seven-acre field behind his parents’ house so they could keep rescue donkeys. But the arrangement wasn’t quite as simple as a gift. The wording he later used suggests he created a life-interest trust: his parents could use the field for the rest of their lives, but ownership would revert to him when they died. That structure had the effect of keeping the field outside his parents’ estate for inheritance tax purposes. As things turned out, it likely made no difference, as their estate was probably below the threshold. But was the trust an accidental curiosity? Or a piece of careful tax planning – some would say tax avoidance – that ultimately turned out to be unnecessary?

This is a story I’ve been working on with the Sunday Times. They’ve published their story today – this article gives the technical background, and my view of what it means.

The facts

The history is as follows:
- In 1996, Sir Keir bought a seven acre field adjacent to his parents’ house and garden (long before he became an MP). The price was £20,000. There were donkeys on the field – the purpose of the purchase was so his parents could look after rescue donkeys.
- Sir Keir became an MP in 2015. MPs are required to register land/property in the Register of Members Interests if it’s worth £100,000 or more. Sir Keir didn’t register the field.
- Sir Keir’s mother died in 2015; his father died on 1 December 2018. The net value of their estate (mainly their house) was £374,091. Mr Starmer was an executor of their estates.
- In 2020, the Daily Mail reported that the field could be worth £10m.
- In January 2022, Sir Keir had the field valued – it was worth more than £100,000 (but nowhere near £10m).
- That means Sir Keir should have declared the field in the Register of Members Interests at some point. Soon after Sir Keir obtained the valuation, his office contacted the Parliamentary Commission for Standards to correct his entry in the register.
- In May 2022, Sir Keir agreed the sale of the field, together with a strip of land previously owned by Sir Keir’s father. Sir Keir’s share of the proceeds was around £295,000.¹
- In June 2022 there was an investigation by the Parliamentary Commissioner for Standards into Sir Keir’s failure to register the field, which ended in Sir Keir apologising and the register being retrospectively amended.
Technical terms in this article
Trust
A legal arrangement where one person holds property for someone else’s benefit. Trusts are a fundamental feature of English law and arise in many ordinary personal and business circumstances.
GOV.UK — trusts overview
Settlor
The person who creates a trust by transferring or declaring property to be held under the trust.
Law Society trust explainer
Beneficiary
A person who is entitled to benefit from the property in the trust, even though they may not be registered as the legal owner of the property.
Life interest trust
A trust where someone has the right to use or receive income from property during their lifetime, and after they die the property passes to another person (often the settlor).
Explainer from Osbornes Law
Interest in possession (IIP)
A present right to enjoy the income or use of trust property, without owning it outright. For example, the right to live in a house or receive rent from it (but not sell it).
Nil rate band (NRB)
The standard inheritance tax allowance (£325,000). This amount can be passed on free of inheritance tax. Any unused allowance can usually be transferred to a surviving spouse or civil partner.
Explainer from Ross Martin
Residence nil rate band (RNRB)
An extra inheritance tax allowance (up to £175,000) when a home is left to children, grandchildren, or other direct descendants. It applies on top of the standard nil rate band.
Explainer from Ross Martin

The life interest trust

I discussed the sale of the field with the Sunday Times earlier this year. I noticed a phrase Sir Keirr used in his correspondence with the Parliamentary Commissioner for Standards:

Most lawyers will read “for so long as they should live” as meaning Sir Keir created a life interest trust. That was my immediate view, and the Sunday Times instructed a KC who agrees.

Sir Keir has neither confirmed nor denied that he created a trust – but it seems a fair assumption that he did (or surely the story would have been denied). (See the update at the top of this article)

Sir Keir’s office says that, after the Sunday Times started asking questions about the arrangements, Keir Starmer engaged a leading tax KC to advise, and that all tax was fully paid.

How a life interest trust works

If we’re right that Sir Keir created a life interest trust², then it worked like this:
- Sir Keir was listed on the land registry as owning the field.
- His parents were beneficiaries of the land during their lifetime. They could use it as they wished, and receive any income from the land. But they could not dispose of it.
- When his parents died, the trust ended and the land became wholly owned (legally and beneficially) by Sir Keir.
I suspect a non-lawyer in Sir Keir’s position wouldn’t think to do this. They would either own the land themselves (but let their parents use it) or give it to their parents outright.

Why not just let his parents use it? We don’t know, but we can speculate that they wanted his parents to “really” own the field, rather than just being permitted to use it. That is sometimes important to people.

Why not a gift, and then inherit the land when his parents died? There are at least two possible reasons:
- Parents often wish their children to share property equally, and their Wills reflect that. Sir Keir might expect to receive the field himself; that would require changing his parents’ Wills.
- If he gave the field to his parents outright, it would have formed part of their estate for inheritance tax purposes. But property in a life interest trust that reverts to the settlor does not, because of section 54(1) of the Inheritance Tax Act 1984.
So in a way the trust gives the best of both worlds: his parents owned the property when they were alive, but with no need to change their Will, and no need for probate when they die. And it potentially avoids inheritance tax.³

(However this is a very complex area, with laws that frequently change. Please don’t take anything in this article as advice.)

Did Sir Keir actually avoid inheritance tax?

This is certainly not a case where Sir Keir failed to pay tax that was legally due. But did the trust reduce the Starmer family’s inheritance tax bill?

Sir Keir’s office told the Sunday Times that “Given the size of the estate, the inclusion or not of the field in their estate made no difference to the estate’s IHT liabilities.”

How plausible is that?

If there had been no trust, and the field had been included in his parents’ estate (at its sale value⁴, then the net value of the estate would have been about £670,000. That’s significantly less than the £875,000 combined exempt amount from both parents’ £325k nil rate band plus his £125k residence nil rate band and her £100k residence nil rate band.⁵

In this scenario there was no tax to avoid – his parents’ estate was worth considerably less than the IHT threshold, and nothing he could have done with the field would have changed that.

However those numbers assume that Sir Keir’s mother used none of her nil rate band or residence nil rate band, leaving his father with a £875,000 combined exempt amount. That’s a reasonable assumption, because most married couples hold their home as joint tenants (so it’s inherited automatically and not under the Will) and Will almost all (or all) of their other property to their surviving spouse.⁶ However if that assumption is significantly wrong – for example because Sir Keir’s mother gave gifts⁷ of more than £205k to someone other than her husband, then Sir Keir’s father’s estate would probably have had an inheritance liability if the field hadn’t been held on a lifetime trust.

I’d therefore conclude that it’s possible that the trust reduced the inheritance tax bill, but Sir Keir has said it didn’t, and the facts are consistent with that.

Did Sir Keir try to avoid inheritance tax?

The short answer is that we don’t know.

The residence nil rate band didn’t exist in 1996 and Sir Keir could have rationally expected rising property values or even the development potential of the field to result in his parents’ estate being subject to inheritance tax.⁸ He might have decided that a trust was therefore better tax planning than giving his parents the field. Whether we call that tax avoidance is a political/ethical question, not a legal question (but, either way, it wasn’t something HMRC would be able to challenge).

Or it could just have been an experienced lawyer’s way of giving the field to his parents whilst they were alive, with tax not entering into Sir Keir’s calculation.

Sir Keir hasn’t been willing to explain why he created the trust. All his team would say to the Sunday Times is:

“Keir Starmer’s decision to allow his parents to use a field he bought them for £20k in the late stages of their lives had nothing to do with any tax considerations. He simply wanted to help his parents keep donkeys.”

That doesn’t really answer the question. Nobody’s suggesting he let his parents use a field for tax reasons. The question is whether he created a trust for tax reasons.

My personal view is that, if he did, this wasn’t tax avoidance – because the tax outcome he achieved was the same as if he’d owned the field himself but let his parents use it. That contrasts with some uses of trusts to (supposedly) magically eliminate tax liabilities – they are definitely tax avoidance, and usually don’t work (and may even constitute tax evasion).

However there is no single legal definition of “tax avoidance”, and others may disagree. I’ve written about the difficulty of defining “tax avoidance”.

Some disclosure: I’m a member of the Labour Party; I was previously a member of its senior disciplinary body (the National Constitutional Committee) but have stood down. I have no formal role in the Labour Party, and I advise policymakers in all parties. Generally that’s on “background”/unofficial: my one official role is that I’m a member of the SNP Scottish Government’s tax advisory group. I also participate in Government consultations, and speak to officials and occasionally politicians as part of those consultations (and have done so for many years, under previous Governments).

Many thanks to Gabriel Pogrund and the Sunday Times. Thanks to S for her expertise in trust taxation.
Footnotes
1. The total price was £320,000, of which about £295,000 related to the field – we know this from the tax summary Sir Keir published for 2022. ↩︎
2. This is sometimes called a “reverter‑to‑settlor” trust, because the property reverts to the person who created the trust – the “settlor”. A life interest trust is also sometimes referred to as an “interest in possession” trust, although there are interest in possession trusts that are not life interest trusts. ↩︎
3. A loan would have had the same tax effect – i.e. Sir Keir loans his parents the funds and they purchase the field. But that requires them to sign documents and complicates probate – it’s a less attractive option. A lease (with peppercorn rent) would have been another approach, but if the term was over seven years then it would have to be registered at the Land Registry. ↩︎
4. That is almost certainly wrong; the value at death was (on a straight-line basis) about 10% less than the sale value, but it gives us a conservative top-end estimate for the size of the estate. ↩︎
5. The residence nil rate band was created in 2017 but could be transferred from a spouse who had died before then. ↩︎
6. i.e. in this, very common, scenario the first spouse uses none of their residence nil rate band and little or none of their nil rate band. ↩︎
7. In her Will or in the seven years before she died. ↩︎
8. He couldn’t have anticipated future developments in IHT, either the long-term freezing of the thresholds or the introduction of the RNRB. ↩︎
28 September 2025
Carter-Ruck: the libel firm trying to cover up that they’d acted for the $4bn OneCoin fraud
Libel firm Carter-Ruck used the threat of legal action to protect one of the world’s largest financial frauds, OneCoin, which stole $4 billion from investors. Carter-Ruck’s client, Ruja Ignatova, is now one of the FBI’s ten most wanted fugitives.

The Solicitors Regulation Authority is now prosecuting Carter‑Ruck partner Claire Gill for an improper threat of litigation. Carter‑Ruck’s response was to try to cover everything up, applying for anonymity and private hearings.

We led a coalition of NGOs to press for open justice. The Solicitors Disciplinary Tribunal just ruled that Carter-Ruck was instructed to further a fraud and, as a result, the hearings will be open and all filings will be published.

Wider questions remain about Carter-Ruck’s role – and this is not the first time they’ve helped protect a Ponzi fraud.

July 2016
Carter-Ruck acts for OneCoin
Cryptocurrency website Coin Telegraph publishes an article saying OneCoin was a Ponzi fraud. Carter-Ruck writes threatening legal action if Coin Telegraph did not take down the article within 7 days.
26 April 2017
Carter-Ruck sends libel threats
OneCoin investor Jen McAdam discussed accusations OneCoin was a fraud in a webcast. Carter-Ruck writes to her threatening legal action if she doesn’t take it down.
July 2017
Carter-Ruck and the FCA
Carter-Ruck writes to the FCA and forces it to remove its consumer warning that OneCoin is unregulated and being investigated by the City of London police.
12 October 2017
OneCoin collapses
OneCoin’s founder and Carter-Ruck’s client, Ruja Ignatova, is charged with fraud and money laundering in New York; two weeks later, she vanishes. OneCoin collapses — it’s a $4bn fraud.
December 2023
Referral to the SRA
Tax Policy Associates files a detailed complaint to the SRA regarding Carter-Ruck’s conduct acting for OneCoin.
6 Aug 2025
SRA prosecution announced
The SRA confirms it is prosecuting Carter-Ruck partner Claire Gill before the SDT.
28 Aug 2025
Anonymity & private hearings bid
At an SDT case-management hearing, Carter-Ruck applies for an anonymity order and the case to be heard in private.
2 Sept 2025
Open justice & disclosure
We lead a consortium of NGOs applying for full disclosure of the case and related documentation.
15 Sept 2025
The SDT ruling
Our application succeeds; the SDT grants full disclosure. Carter-Ruck withdraw their anonymity application.

Carter-Ruck and OneCoin

Carter-Ruck is possibly the UK’s most well-known libel-specialist law firm. At some point in 2016 it decided to act for OneCoin and Ruja Ignatova.

OneCoin¹ claimed to be a cryptocurrency like Bitcoin. It wasn’t. There was no “blockchain” – OneCoin just made up prices, took investors’ money, and paid some out to other investors and kept the rest for themselves. It was a Ponzi fraud.

Carter-Ruck should have known OneCoin was a fraud. The signs were obvious at the time. One look at OneCoin’s own publications showed price changes that were impossible for a real traded cryptocurrency:

But Carter-Ruck either didn’t conduct proper due diligence, or didn’t care. They wrote aggressive letters to websites and unrepresented individuals threatening them with libel proceedings for making points that were self-evidently true.

In January 2017, OneCoin suspended clients’ withdrawals of money, but continued to accept new funds. Semper Fortis, an obscure firm which had “audited” OneCoin in 2015 didn’t publish an audit for 2016 or 2017. As at April 2017 its website consisted of one page saying “under construction”.

None of that bothered Carter-Ruck. In July 2017, they then wrote to the Financial Conduct Authority, pushing the FCA to take down its warning notice on OneCoin (which said that the City of London police were investigating). The FCA blinked, and took it down.

This was all at a time when multiple countries had started to pursue criminal or enforcement proceedings against OneCoin:

International action against OneCoin by July 2017

OneCoin collapsed in 2017, and its executives are all now either in jail or on the run. Around $4bn was stolen from millions of investors, across 125 countries. Carter-Ruck’s client, Ruja Ignatova, is one of the FBI’s ten most wanted fugitives, with a $5m reward for information leading to her arrest.

In 2023, The Bureau of Investigative Journalism published a report on Carter-Ruck, with a particular focus on its actions acting for OneCoin. We then compiled a detailed legal analysis of Carter-Ruck’s actions acting for OneCoin, looking at what they did, what they should have known at the time, and how they should have acted. We concluded that Carter-Ruck acted recklessly, should have known OneCoin was a fraud, and had breached the principles governing solicitors.² We referred Carter-Ruck to the Solicitors Regulation Authority on that basis. On 6 August 2025, the SRA announced that they would be prosecuting the solicitor responsible, Claire Gill, before the Solicitors Disciplinary Tribunal (SDT).

Carter-Ruck might at some point have shown signs of contrition, apologising for what (at best) was a terrible mistake, and promising to take steps to avoid repeating it.

Instead Carter-Ruck tried to cover up their misdeeds.

Carter-Ruck’s anonymity application

Carter-Ruck applied to the SDT to anonymise the case, and requested private hearings. The supposed justification was to protect their clients’ legal privilege – a laughable claim, as legal privilege doesn’t apply where a lawyer is engaged to further a fraud. We expect the real reason was to protect Carter-Ruck’s reputation from being linked to OneCoin and their fugitive ex-client Ruja Ignatova.

In other circumstances, Carter-Ruck might have achieved this without anyone finding out. However we were notified of the upcoming prosecution, because we’d made the original complaint. Representatives of the media were therefore present at the hearing, and were given an opportunity to respond to the anonymity application. There’s a detailed report of the hearing from investigative court reporter Daniel Cloake.

Tax Policy Associates, together with the Bureau of Investigative Journalism, The Foreign Policy Centre, The Free Speech Union, and Spotlight on Corruption, then applied to the SDT for the exact opposite of what Carter-Ruck were asking for.

We sought complete disclosure of everything: the prosecution documents, Carter-Ruck’s defence, and all the supporting documentation.

We believe the public has a right to know how Carter-Ruck ended up helping fraudsters, and had a right to see how they answer that charge. Usually much of that documentation would be legally privileged; in this case we believed none of it would.

We therefore made an application in line with privilege caselaw and the SDT’s disclosure policy.

The Carter-Ruck documents

Here’s Carter-Ruck’s application for the anonymity order:

Here’s our application:

The SDT granted our application, ruling that – on the balance of probabilities – Carter-Ruck was instructed to further a fraud and so legal privilege did not apply. The SDT ordered all materials to be published, with redactions to protect personal information.

The Carter-Ruck/OneCoin SDT materials should be published next week. Carter-Ruck has withdrawn its anonymity application.

Here’s the SDT decision:

Carter-Ruck – zero contrition

Most lawyers would be appalled at the thought that they hadn’t just acted for fraudsters, but had actually helped further the fraud. Carter-Ruck, however, aren’t showing even the slightest sign of contrition.

The filings above reveal that Carter-Ruck are pursuing an aggressive defence which involves trying to obtain internal SRA papers.

This looks like a collateral attack on the SRA – and it seems entirely irrelevant to the question of whether Carter-Ruck acted improperly.

Carter-Ruck and Harlequin

OneCoin wasn’t the first time Carter-Ruck had acted for fraudsters, and sent out libel threats that covered up an international Ponzi scheme.

In the early 2010s, a company called Harlequin sold “below market” plots in the Caribbean to thousands of investors, with the help of endorsements from former sportsmen including Pat Cash and John Barnes.

In 2011, accusations emerged on the “Singing Pig” internet property forum that Harlequin was a Ponzi fraud. Carter-Ruck brought a defamation action and the forum was shut down.

But Harlequin was, in fact, a fraudulent Ponzi scheme. The company had sold far more development plots than it had land to build on, and investors’ 30% deposits were used to pay huge commissions to salesmen, or diverted to the Ames family, who owned the business. The company couldn’t explain where the deposits had gone, and investors ended up losing £398m.

Out of the 9,000 plots sold, only 28 people received a property.

Much of the £400m losses were covered by the Financial Services Compensation Scheme, because many of investors had been persuaded to use SIPPs to invest in the scheme.

The man behind Harlequin, David Ames, was described by the High Court as a “Walter Mitty-type figure who, through an unhappy mixture of dishonesty, naivety and incompetence, has caused irreparable loss to thousands of people”.

In 2022 he was jailed for 12 years for fraud.

APJ Solicitors have written an excellent summary of Harlequin’s history. There’s also a great write-up from Citywire.

Carter-Ruck missed at least one obvious warning sign. Harlequin was run by David Ames – but as a bankrupt he was banned from being a director. So supposedly his wife and son were the directors, with David Ames pulling the strings as the Chairman. Any lawyer should have seen that as a red flag: Ames was acting as a shadow director and breaking the law.

But Carter-Ruck missed that, just as they missed all the OneCoin warning signs. And just as with OneCoin, Carter-Ruck have never shown any contrition.

Until we published this article, the Carter-Ruck website still boasted about their success with Harlequin, back in 2011, successfully taking down a website that tried to tell the world that their client was a fraudster.³

What happens next?

It is hard to believe that Carter-Ruck knew it was acting for fraudsters.

But a competent firm in Carter-Ruck’s position should have known OneCoin was a fraud. Even acting for OneCoin was a serious professional breach; trying to silence OneCoin’s critics was even more serious than that.

We don’t know enough about Carter-Ruck’s actions acting for Harlequin to say what it knew, or should have known. We hope to publish more on this soon.

We won’t know the conclusion until the substantive SDT hearing in mid-June 2026 . For the moment, we have to hope that Carter-Ruck’s experience before the SDT makes it think more carefully before acting for people credibly accused of fraud.

Many thanks to the Bureau of Investigative Journalism, The Foreign Policy Centre, The Free Speech Union, and Spotlight on Corruption.

Thanks also to The Guardian and Reuters, who were instructing lawyers to challenge Carter-Ruck’s application for the anonymity order (before it was withdrawn).

And thanks to Daniel Cloake for his reporting of the hearing.
Footnotes
1. The BBC article, podcast and Jamie Bartlett’s book are probably the best sources for the history of OneCoin. The Wikipedia article isn’t very good – it looks like a very old article that’s been occasionally updated. It badly misreads its sources, for example claiming that BBC reporters believe Ruja Ignatova is living in Frankfurt. ↩︎
2. It’s important to differentiate two scenarios: a solicitor defending someone accused of fraud, and a solicitor assisting a fraud. The first is not just permitted, but essential for the justice system to function (although of course a solicitor must still act within the boundaries of his or her obligations to the rule of law and the court, and for example not mislead a court). The second is not permitted. A libel lawyer instructed to act for a client against accusations of fraud isn’t required to carry out an extensive investigation as to whether the accusations are true. But if the accusations are likely true on their face then it is in our view impermissible for the lawyer to threaten libel threats against people making the accusations. ↩︎
3. We link to an archived version of the page; the link went dead at some point after 18 September 2025. ↩︎
18 September 2025
Why Angela Rayner is likely to pay £8,000 in stamp duty penalties
We now have enough information to be able to answer the question of whether Angela Rayner will be subject to HMRC penalties, and how large those penalties will be. For the reasons below, in my view Ms Rayner will very likely receive penalties for a “careless” error of around 20%.

The background

On the basis of Angela Rayner’s statement on Wednesday, the report from Sir Laurie Magnus, and other publicly available sources, the background facts are as follows:
- A court created a trust in 2020 to help support the needs of her disabled child. The child was the sole beneficiary of the trust.
- At that time, Ms Rayner and her husband lived in a house in Ashton-under-Lyne, in Greater Manchester.
- Ms Rayner and her husband divorced in 2023. Probably as part of the divorce settlement, some of their interest in the house was then transferred to the trust, “to ensure [her disabled son] continued to have stability in the family home”. The trust may have paid cash to Ms Rayner and her husband in return for the interest in the house, but that’s not clear.
- The couple agreed a “nesting” arrangement in which they took turns living in the house, looking after their children.
- In 2025, Ms Rayner sold the rest of her interest in the Ashton-under-Lyne house to the trust for £162,500 cash. That may or may not have been part of the divorce settlement, but probably had to be approved by a court given the trust’s involvement in the transaction.
- Shortly after, Ms Rayner acquired a flat in Hove for £800,000.
- Ms Rayner obtained two sets of advice, from her conveyancer and a trusts lawyer, that the standard rate of stamp duty¹ applied to her Hove purchase, and not the higher rate for second homes. However both sets of advice stated that it was not expert tax advice. One made a suggestion that she should obtain specialist advice; the other made a recommendation.
- Ms Rayner however did not obtain specialist tax advice, and therefore paid stamp duty at the standard rate.
- Following recent press coverage, Ms Rayner instructed a leading tax counsel and received advice that “the application of complex deeming provisions which relate to my son’s trust gives rise to additional stamp duty liabilities”.
- This means that Ms Rayner should have paid the higher rate of stamp duty, an additional £40,000.
The law

The relevant stamp duty land tax legislation is as follows:
- Stamp duty land tax legislation is mostly contained in Finance Act 2003. The “higher rates for additional dwellings” (HRAD) rules are in Schedule 4ZA Finance Act 2003, which was created by Finance Act 2016.
- The higher rate was introduced at 3% but (from October 2024) is an additional 5% on each band of stamp duty (including the 0% band).
- The main rule, in paragraph 3 of Schedule 4ZA is that the higher rate applies if, at the end of the day you complete your purchase, you have a “major interest” in another dwelling worth £40k+, and you are not replacing your only or main residence.
- The definition of a “major interest” is in section 117 Finance Act 2003, and broadly covers any ownership interest in land, but not where someone is merely a trustee.
- There are rules for other cases in paragraphs 4 to 7 of Schedule 4ZA.
- If one person holds as trustee then, where it’s a bare trust or life settlement, it’s the beneficiary who is treated as owning it.
- But that creates an obvious avoidance opportunity. I could say I hold my family house on trust for my children, buy another property, and escape the higher rate charge.
- There is a specific rule in paragraph 12 to counter this. If minor children (i.e. under 18) are beneficiaries of a trust over property then the parents are treated as owning the property.
- That could create an unjust result if the trust was created as a result of a court order to protect a child with diminished capacity. So a specific exclusion (now in paragraph 12(1A)) was created in 2018 to prevent the higher rate stamp duty applying in this situation.
- The exclusion applies where a trustee is acting under powers conferred by a court appointment under the Mental Capacity Act 2005.
- The MCA 2005 allows a court to make an order appointing a “deputy” to make decisions on behalf of someone with diminished capacity. Often a deputy will hold property on that person’s behalf, as trustee.²
This is all accurately and succinctly summarised in HMRC guidance.

How did the law apply?

When Ms Rayner acquired the Hove flat, it was the only property she owned. She was registered at the land registry as one of the owners of the Ashton-under-Lyne house, but she was just a trustee, with no economic/beneficial interest. So on the face of it the higher rate did not apply.

So the usual position would be that Ms Rayner’s purchase of the Hove flat would be taxed at the normal SDLT rate, meaning £27,500.³.

However, Ms Rayner’s son was the beneficiary of a trust over the Ashton-under-Lyne house. That means that paragraph 12 deemed Ms Rayner to own the house.

Why didn’t the exclusion in paragraph 12(1A) apply? At this point we don’t know. Possibly something to do with the terms of the court order/trust that we’re not aware of. Possibly because the trust was in favour of her other children as well.⁴ Sir Laurie Magnus’s report says:

“I understand there are additional complexities, for example concerning the particular type of trust in question and the reason for which the trust was established. Taken together, it appears that – particularly in the context of the specialist type of trust in question – the interpretation of these rules is complex.“

So we should probably assume this wasn’t a simple ignorance of the existence of paragraph 12, but something more subtle.

Whatever the reason, the higher rate therefore applied, meaning £67,500.⁵ So an additional £40,000 was due.

Will Ms Rayner face HMRC penalties?

I expect that she will.

The general rules for penalties are in Schedule 24 Finance Act 2007, and apply to most taxes, including stamp duty land tax.⁶

There is plenty of caselaw on HMRC penalties, but I’m not aware of any where a taxpayer was advised to obtain specific tax advice, but didn’t. The following is my view based on applying the legislation, the principles in decided caselaw, and my experience of HMRC’s approach in practice.

There is no penalty for an innocent mistake, which was neither careless nor intentional (although the tax and interest remain due).

Penalties will, however, apply under paragraph 1 of Schedule 24 if a stamp duty return contains an understatement of tax which was “careless”. Paragraph 3 says that an inaccuracy is “careless” if it is due to failure by a taxpayer to take reasonable care.

The standard of “reasonable care” is the behaviour which a prudent and reasonable person in the position of the taxpayer would adopt. That means one takes account of the taxpayer’s particular abilities and circumstances.

When you instruct an adviser, and provide them with complete facts, you are entitled to rely on their advice, even if it turns out your adviser was careless (unless the advice was manifestly unreasonable or you failed to provide the adviser with complete facts). So if (for example) Ms Rayner did not read HMRC guidance herself, that does not make her “careless”.

I think it is reasonable for a layperson to trust a conveyancer’s advice on stamp duty (not least for the very practical reason that any other conclusion would cause grave difficulties in the property market), and a trust lawyer’s advice on tax involving trusts.⁷ However your ability to rely on your conveyancer ends if the conveyancer advises you to speak to a specialist. That is what happened here.

My view is that a prudent and reasonable person in the position of Deputy Prime Minister would seek tax advice on a property transaction, particularly if they held legal title to another property, under a complex trust arrangement. My view is that, if the adviser told them they didn’t have expertise in the point, and suggested they receive specialist advice, a prudent and reasonable person would have obtained that advice.

As the First Tier Tribunal said in the Lithgow case:⁸

“[R]eliance upon properly provided professional advice, absent reason to believe that it is wrong, unreliable or hedged about with substantial caveats, will usually lead to the conclusion that a taxpayer has not been negligent if he has taken and acted upon that advice.“

Here there was a “substantial caveat”, and Ms Rayner did not act upon the advice to obtain specific tax input.

It follows that in my view Ms Rayner was almost certainly “careless”.⁹

What is the level of penalties?

The maximum penalty for “carelessness” is 30% of the lost tax.

Carelessness penalties are reduced, potentially to zero, if a taxpayer approaches HMRC with the error – in tax parlance, they made an “unprompted” disclosure. But in Ms Rayner’s case, her correction is realistically “prompted” – she only obtained proper tax advice after a week of press scrutiny, and HMRC were already aware of the issue.¹⁰ That means that, under current HMRC practice, the level of penalties will usually be 15% to 30%.

I expect that, with reasonable cooperation from her advisers, the final level of penalties would be around 20% – so about £8,000.¹¹

Disclosure

I’m a member of the Labour Party; I was a member of its senior disciplinary body (the National Constitutional Committee) but have stood down. I have no formal role in the Labour Party, and I advise policymakers in all parties. Generally that’s on “background”/unofficial: my one official role is that I’m a member of the SNP Scottish Government’s tax advisory group. I also participate in Government consultations, and speak to officials and occasionally politicians as part of those consultations (and have done so for many years, under previous Governments).

Thanks to T for their help with the stamp duty analysis, O for MCA 2005 background, and J for an SDLT correction after publication. And thanks to S for adding additional colour on the penalties caselaw.

Photo ©House of Commons, CC BY 3.0 licence.
Footnotes
1. Apologies to all tax advisers reading this, but I’m going to refer to stamp duty land tax as “stamp duty” throughout this article. ↩︎
2. Usually it’s adults rather than children who are the subject of such orders, as children’s affairs are already managed by their parents, but it’s not uncommon for orders to be made for children when they turn 16, so everything is in place in good time for when they turn 18. ↩︎
3. The applicable rates at the time meant the calculation was: 0% on the first £250k, and 5% on the rest. Assuming this was not a new lease, the ground rent does not affect the calculation. ↩︎
4. Paragraph 12 is applied separately to each child. So a child beneficiary who is within the paragraph 12(1A) exclusion doesn’t cause their parents to be deemed the owner of the property. But other child beneficiaries of the same property, who aren’t in the exclusion, will cause their parents to be deemed the owner. This is a potential “gotcha” for parents who try to protect all of their children, instead of just focussing the trust on the one child who needs MCA 2005 protections. ↩︎
5. The applicable rates at the time meant the calculation was: 5% on the first £250k, and 10% on the rest. ↩︎
6. There is an excellent summary of almost all procedural tax legislation and caselaw at procedure.tax – an amazing free resource created by Michael Firth KC. ↩︎
7. It’s is my view that neither is qualified to advise on non-straightforward SDLT questions, particularly those involving trusts, and I think most tax professionals would agree – but I don’t think it’s fair to assume that a prudent and reasonable layperson would share my view our on this. ↩︎
8. Lithgow v HMRC TC2011/09646. See also Anderson [2016] UKFTT 335: “Nor would we expect such a taxpayer
  to obtain another professional opinion again unless there is reason to do so, of which the taxpayer ought to reasonably be aware, such as that any qualification put upon the advice by the firm may limit its reliability”. ↩︎
9. I say “almost” certainly because Ms Rayner has at least two counter-arguments. The first is to say that I’m wrong, and it was reasonable to rely on the two advisers, despite their caveats. Perhaps she could say she was used to lawyers adding caveats and thought it was just pointless boilerplate. I don’t agree with that. Alternatively, in principle Ms Rayner could avoid penalties if she could show that, even if she had obtained expert tax advice, they would still have got the answer wrong. We don’t know what the underlying complexity is, but this feels like a very challenging argument to run in circumstances where no tax advice was obtained at all (as opposed to cases where advice was obtained, but the taxpayer provided incomplete information). And Sir Laurie’s letter says that “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’m also conscious that we haven’t seen the advice in question, and we are reliant upon Sir Laurie’s summary of what it said – he’s a very eminent and intelligent man, but not a lawyer. ↩︎
10. Paragraph 9(1E)(2) says a disclosure is unprompted “if made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the inaccuracy”. Once the press coverage began, it was likely inevitable that HMRC would discover the inaccuracy in Ms Rayner’s SDLT return. Ms Rayner had a “reason to believe” HMRC were “about to discover” the inaccuracy. So this is an unusual type of “prompted”, but it is in my view still “prompted”. ↩︎
11. If Ms Rayner’s advisers told HMRC immediately when the error was discovered then penalties could be reduced right down to 15% (for “telling“). Careless penalties can be suspended in some circumstances, but usually for taxes which are paid on an ongoing basis (e.g. VAT) and not typically for stamp duty land tax. ↩︎
5 September 2025