Angela Rayner resigned from the post of UK Deputy Prime Minister on Friday September 5, 2025 due to a tax problem!

When she purchased a seaside home, it seems she paid a lower rate of UK Stamp Duty Land Tax applicable to principal private residences, overlooking a second home apparently held through a family trust.

In her Sep 5 resignation later, Rayner wrote: “I deeply regret my decision not to seek additional specialist advice…I take full responsibility for this error”.

This followed an adverse report from Sir Laurie Magnus, Independent Adviser on Ministerial Standards, to UK Prime Minister Sir Keir Starmer. He wrote: “…she cannot be considered to have met the highest possible standards of proper conduct” as envisaged in the UK Ministerial Code.

What was going on? Was there tax avoidance or tax evasion? Many countries follow UK tax principles in this regard.  

The UK side:

Few topics in tax law provoke as much public debate as the distinction between tax avoidance and tax evasion. Politicians, business leaders, and ordinary taxpayers alike are often accused of blurring the two. Yet under UK law, the difference is clear: one is legal (if contentious), the other criminal.

Tax evasion is the unlawful act of deliberately concealing income, misrepresenting financial affairs, or otherwise deceiving HM Revenue & Customs (HMRC). It is a criminal offence, punishable by prosecution, fines, and potentially imprisonment. Examples include hiding income offshore, falsifying records, or underreporting cash sales.

Tax avoidance, by contrast, is technically legal. It involves exploiting gaps or ambiguities in the tax code to reduce liability—for example, structuring a business through offshore subsidiaries, or arranging personal finances to minimise inheritance tax. Such arrangements may comply with the letter of the law, but often breach its spirit.

UK law has grown increasingly intolerant of aggressive avoidance. The General Anti-Abuse Rule (GAAR), introduced in 2013, allows HMRC to strike down arrangements it deems “abusive,” levy penalties of up to 60%, and demand immediate repayment. The message is clear: legality alone does not guarantee safety from challenge.

Why the Distinction Matters

The distinction between avoidance and evasion has practical, political, and ethical consequences. A business leader who engages in aggressive avoidance may face public criticism and civil penalties but is unlikely to be prosecuted. Someone who commits evasion, however, is subject to the criminal law.

This line matters because it protects the integrity of the tax system. A legal framework that confuses error, avoidance, and evasion risks either over-criminalising genuine mistakes or under-punishing deliberate fraud.

Contemporary Illustration:

The Rayner case has drawn public attention to these boundaries. Rayner admitted to underpaying stamp duty when purchasing a property, citing reliance on poor legal advice. The sum involved could exceed £40,000.

While politically damaging, her case illustrates the nuances: there is currently no evidence of deliberate concealment (evasion), nor of carefully engineered tax loopholes (avoidance). Instead, it highlights a third category—mistake or misadvice—which, though embarrassing for a senior official, is treated differently under UK law.

The Broader Picture

Rayner’s controversy is far from unique. From celebrities using offshore trusts to multinational corporations engaging in “profit shifting,” tax behavior sits on a spectrum. At one end lies outright fraud; at the other, entirely legitimate tax planning (such as using UK ISA savings or pension contributions).

So we must distinguish carefully between: (1) Evasion: always illegal, always punishable; (2) Avoidance: legal but contestable, increasingly disfavoured; (3) Error: unintentional misreporting, often corrected with interest and penalties but without criminal stigma.

Distinguishing avoidance from evasion—and both from honest mistakes—remains essential to preserving trust in the tax system.

International Comments:

Many countries (e.g. Israel) have a general anti-avoidance rule (GAAR) which targets artificial or fictitious acts. The US has an anti-sham doctrine.

In general, a tax authority may activate its GAAR if an act or series of acts appear to lack commercial rationale i.e. they amount to tax evasion not legitimate antiavoidance.

Also, the banks in many countries block international remittances until tax compliance in each country concerned is proven.

The Rayner affair ended swiftly with her departure from office a few days after the tax problem surfaced. In our experience, it is usually preferable to settle tax cases without reaching  the court system. In many countries there are tax tribunals.

A tax amnesty procedure also exists in some countries.

In our experience, Rayner’s situation was avoidable. When working with professional advisors, check the engagement agreement or instructions say what they are expected to do.

As always, consult experienced tax and professional advisors in each country at an early stage in specific cases.

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Leon Harris is an accountant and tax specialist at Harris Consulting & Tax Ltd . James Cohen is a Partner & Head of the Private Client Department at Seddons GSC, a London law firm