Wednesday, May 20, 2009

Are Geoff Hoon's Fingers Crossed When it Comes to CGT?

Hazel Blears has been singled out for not paying the capital gains tax on a London flat which was designated by the Fees Office as her second home. She has since paid a cheque for £13,000 to the HMRC, and made it clear that she recognises people’s anger. But what about her Cabinet colleague Geoff Hoon?

“Other Cabinet ministers, including Geoff Hoon, the Transport Secretary, were refusing to say whether they benefited similarly on properties that had been registered as second homes.”
Daily Telegraph 12th May 2009
“Yesterday it emerged that Nick Brown, the Chief Whip, was leading efforts to establish whether Geoff Hoon, the Transport Secretary, would have to repay thousands in capital gains tax. In 2006, Mr Hoon sold a property in Lambeth, south London, that between 1992 and 1997 he listed with the Commons as his second home. He was estimated to have made a profit of more than £300,000 on the sale of the home but has yet to say whether he paid tax.”
Daily Telegraph 14th May 2009

So has Cabinet Minister Geoff Hoon committed exactly the same misdemeanour as Hazel Blears, but hopes no-one will notice? By saying nothing, does he hope he will get away with it, and keep the cash? Has he paid CGT or not? If he has, why won’t he just say so?

Perhaps my my friends in Her Majesty's Press might like to quiz him on this. Hard.


David said...

If GB can call Hazel Blear's conduct "totally unacceptable" (even he has to be right sometimes) why is he silent about Hoon? A £300K capital gain would produce CGT of £120K, a bit of a gulp even for a millionaire (thanks to taxpayer money) like him. There is also the small matter of him being totally incompetent in every job he has had. Does he simply know where too many bodies are buried?

Anonymous said...

Her Majesty's press? Surely you mean the Met Police and HMR&C!

John Hutton, the one true prophet, said...

Much as I'd love him to land in the shit from this it sounds like it was his principle residence from 1997 to 2006. HMRC would take a 10 year view and on a 'pipe and slippers' basis it looks to me like he's in the clear.

Blears on the other hand is toast. Couldn't happen to nicer person.

Anonymous said...

Has Hazel Blears really paid a cheque to the HMRC? Are you sure about that? You can't just pop a cheque in the post to them if there is no money due to them. It's not as if there was an outstanding bill waiting to be paid. I would like to know exactly how this matter was dealt with.

Anonymous said...

What about Ed Balls and Yvette Cooper's "flipping" mistakes? Are they to be punished too?

Carnot said...

Sadly Klingon Brown has not got the balls to get serious with this.

Watch all his cronies fold their arms, look smug and sit tight.

We are dealing with Brown's ego.

Liz said...

And if Blears' behaviour has been 'totally unacceptable', what about Balls and Cooper claiming three times the mortgage interest that they were entitled to?

Lee H said...

DC has just out manouvered GB in the Commons over the General Election. Very Funny!!

not an economist said...

Singling Blears out ranked of political manoeuvring on Brown's part - taking the opportunity of getting shot of someone who criticised him from within the cabinet. Yet this doesn't seem to get commented on mcuh in the news. Unless I am missing the references that is.

I dont really rate the woman but her treatement over this seems unfair. Oh yea ... and I dislike Brown more tbh ...

UB41 said...

It's not just the tax Iain.

MP's should not profit from ACA full stop.

Nikostratos said...

If Having just fiddled £13000 pounds in housing benefit and paid a cheque for £13,000 to the council i made it clear that i recognise the councils/ people’s anger.

do you reckon there should be no prosecution?

bewick said...

FORGET the CGT. That in the main is just less than HALF the profit. The taxpayer funded the property. The taxpayer should get the WHOLE profit.
What's the betting that at the next election when many MPs lose their seats and have to sell they will be bleating that they've made a financial loss and the taxpayer must pay again?
And Oh John Hutton, pedant that I am, you MEAN "PRINCIPAL" (aka first) rather than principle - not that many MPs actually recognise "principle" so you are forgiven.

Anonymous said...

It's already been said here, but who will be the first to prize the truth from Blears lips. What exactly was that cheque for?

Consider this:

After watching her recent public cheque-waving gesture, where she stated she was paying the “Inland Revenue” £13,332 in Capital Gains Tax – even though she was not liable – I contacted my local HMRC Capital Gains Tax Specialist to ask how such a non-liable payment would be processed, if I made one.

I was told – after being queried why I would do such a thing – that a payment made against a non-existent liability would simply be credited to my personal tax account, and be offset against any future tax liability.

In other words Ms Blears £13,332 “payment” (and is there any evidence such a payment was actually made?) is simply an advance payment of her future income tax – which she would have had to pay anyway – and is not a Capital Gains Tax payment at all!

Thus, the public will have been deceived into thinking SHE has paid the tax, and is £13,332 out of pocket, when – in reality – she will be no worse off and it is the public who have lost out!

I think such a seeming deceit should be brought to the attention of the public.

Lee H said...

Geoff Hoon is a trouble shooter for GB. He is safe, some way will be found where he can wriggle out of it. Alistar Darling on the other hand.....scap goat maybe?

Save the Chipmunk said...

The way you talk about Blears anyone would think she was a Tory.

Alex said...

There is a long standing convention that ministers/HMRC/politicians do not comment on the tax affairs of particular individuals. For good reason, because they should be commenting on tax as it applies to everybody rather than a particular individual.

A better approach would be to get HMRC to look at all tax returns by MPs that have sold a property on which ACA's have been claimed in the last 6 years, or 20 years if they think there has been flaud or negligence.

One problem is that it is perfectly possible to elect to tell the Revenue that your second home is actually your main home if you tell them in writing when you buy it, whereas the parliamentary system hitherto would allow eithern home to be treated as a second residence irespective of what you told the Revenue.

J R Hartley said...

Hazel knew what she was doing writing that cheque. She was committing the Hoon to writing a much bigger cheque on the same principle....

Isn't Guido working on the Hoon's guide to house-flipping as we speak in his "How to make a million property profit at tax payer's expense?"

TomTom said...

I thought the penalty for cocealing a CGT Liability was a 100% fine

Anonymous said...

On a wider point, I think Gordon has been harder on Jacqui Smith than Tony McNulty, and it was like pulling teeth to get him to say any supporting words in her favour.

He just seems to think that the women are a softer target and won't hit back, and aren't part of his 'gang' anyway.

What do other women think - am I being too harsh on him ?

bewick said...

anonymous (immediately after me, Bewick) said much.

I SUSPECT the chipmunk, EITHER was practicing exactly what anonymous suggested -deceit - OR more likely was following the habits of a lifetime and doing things without thinking through. MUCH like most politicians particularly when in Government.
I'm now looking for best odds on an autumn election and I'm NOT a betting man but when I spot a certainty then why hesitate. Ooops I'm looking more like a politician by the day!

whore with a heart of gold said...

Why are people not, metaphorically, on the streets demanding a general election?

This shower of shit have got to go.

cassandra said...

Far be it for me to correct such an august and intelligent person like Mr Dale BUT Blears has CLAIMED to have made a payment to the HMRC, she could have sent it to her accountant where it will sit OR she sent the cheque to the HMRC where it will sit untill she gets it back with interest at a later date.
The cheque was blank and I dont think that was an accident Mr Dale, I know you have a soft spot for the 'chipmunk' but in your future dealings with her it might be a wise course of action to verify her claims.

Your humble servant & long time fan,

Cassie K.

Anonymous said...

Did they pay interest, plus a fine up to 100% of the sum avoided.

I had to when I accidentally omitted to declare a small pension.

Or perhaps the law regarding tax is different for them?

davefromluton said...

Guido promised a week or more ago to do a complete expose on Hoon's property dealings.
Where is it?

Anonymous said...

Bewick :"FORGET the CGT. That in the main is just less than HALF the profit. The taxpayer funded the property. The taxpayer should get the WHOLE profit."

How many times does it have to be said? The ACA pays only the interest on a mortgage, not the capital thus the taxpayer has not "funded the property".

An MP receiving mortgage interest via ACA is either repaying the capital or risking it in an interest-only mortgage.

There is no case whatsoever for anything other than CGT to apply to the sale of an MP's second home.

The taxpayer via ACA has not risked capital, so it is not entitled to the profit (if there be one).

There is no return to the taxpayer where an MP has received an equivalent amount in rent allowances.

This call for all profit on second home recognises no equivalent commitment to cover any losses on a second home sale.

Nor does it recognise a whole variety of potential circumstances. For instant a losing MP, for whatever reason retains his second home and continues to fund all the repayments out of his own resources after leaving Parliament. What do you do when he sells 5, 10 or 20 years later?

There is no calculation that could by any stretch be called reasonable to encompass the repayment of that portion of profit due for the period the interest payment was being paid through ACA.

CGT handles the question of the profit gain in such circumstances perfectly well.

Anonymous said...

In 2006, Mr Hoon sold a property in Lambeth, south London, that between 1992 and 1997 he listed with the Commons as his second home. ...and the revenue rules say that if it's been my principal residence for 3 of the last 5 years, I don't pay CGT. So where did Hoon live between 2001 and 2006? In Lambeth, or in a grace-and-favour place somewhere?

(Actually, I seem to remember that if you are required to live elsewhere for your employment (live-in security guard, for example), you can still claim the CGT exemption on your house. So Hoon might be in the clear if he was forced to live in a grace-and-favour apartment because of securiy concerns.)

Anonymous said...

davefromluton - maybe Guido is trying to persuade the Daily Mailygraph to run it...

Anonymous said...

Sorry, the last "anonymouse" is wrong.

Many MPs have taken out 100% mortgages and had the interest on them paid out of taxpayer's funds.

As prices increased by 30-45% over the three years to 2008, they have then been able to sell, redeem the mortgage and make a "profit". It's called leverage and is what the hedgies do all the time. Even if they did put equity in, the gain on the mortgaged part is still profit.

Personally, I believe all MPs at the start of the next Parliament should nominate the home they want to be their second home and the Parliamentary authorities should buy it, up to a maximum figure equivalent to the value of a two-bed flat in the MPs constituency. If they want to noiminate a higher value property, then they make up the difference.

All bills for maintenance will be paid for by Parliament and if the home is jointly owned, the MP will have to pay their share to Parliament along with a similar share of utility bills and Council tax.

That way, any gain from the taxpayer funded portion of the home is retained by Parliament.

Ministers with Grace and Favour apartments would have to buy out Parliament's share, or pay rent on it, as their G&F homes ought to be seen as their second home so they have to pay for at least one home out of their salary like everybody else!

Ron Owen said...

How do we all know that Ms Blears did not pay CGT?

Did she tell us? If not, who did?

Anonymous said...

On behalf of those that are expert in tax law, please just stop. All over, and not just here specifically, there is so much nonsense talked and written about the CGT etc. It has beeen thrown up as a smokescreen, and to get people into a tizz of misdirection.

I would venture most strongly that Blears, Hoon etc., have not broken any tax laws and that they are clean in that respect, although not necesarily in others. Both Blears and Hoon are lawyers, and should know what they are doing on this score. Although, goodness only knows what Blears was thinking with her stunt.

What Blears did is tantamount to an adnmission that she had profited improperly from public money, but rather than hand over that profit, she has offered, in round terms, 30% of it back to the public. So, put another way, I acknowledge I ripped you off and, to make amends, I will give you back part of my profit, and keep the rest for myself. Oh, shucks, that makes it OK then. Remove the tax word and it helps to show what it really is. It is nonsense.

Tax is an emotive issue, and one prone to raise the hackles of those who, through no fault of their own, have only a limited understanding of the law.

As someone who does, or at least should, know his stuff when it comes to tax, I say move on.

In terms of retribution, there is lots of more fertile territory to be had elsewhere. There is not just the oft mentioned Theft and Fraud offences, but malfeasance in public office, and cheating the public revenue (although not claiming any criminal law expertise myself, this is a beauty of an offence, having a media friendly name and carrying a maxmium sentence of life imprisonment and an unlimited fine; it is the law's equivalent of that lamp post and a sturdy rope.)

People could also now be asking questions over whether the troughers should be demanded to waive their entitlement to the resettlement grant (often equivalent to a whole year's salary and the first £30K tax free) which they get if they retire at the end of a parliament, rather then stand down beforehand.

Flemingcrag said...

We now know why Labour Ministers were so lax in closing the many avenues open to those hell bent on tax avoidance; They were too busy taking advantage of them for personal gain.

The dilemma facing Gordon (Son of the Manse) Brown is now that he has condemned Hazel (tax avoidance repentant) Blear's actions as totally unacceptable, how does he square the circle with the actions of the unrepentant Geoff (Buff) Hoon who is reputed to have made circa 7 times the profit of Hazel on his tax funded property deals and never paid a penny in Capital Gains Tax.

My guess is he will treat him as he did all his money grubbing Banker friends and recommend him for a Knighthood, most likely justification will be the immense savings he made on the running costs of the Armed Forces during a time of conflict.

Newmania said...

Yes and what about Jack Straw , thats all gone quiet

Elby the Beserk said...

All we need to know about Hoon is that on Guido's blog, if you type in "c**t", it gets tranlated to "Hoon".

Quite so.

Loathsome man. War criminal.

Fuck 'em all.


Anonymous said...

Have just posted on this myself

The difference is the Blears had her hands in the minibar.