Maria Miller and Mark James: tales from loophole land
News that Culture Secretary Maria Miller MP could take advantage of a legal loophole to avoid capital gains tax on the sale of her former ‘second home’ in Wimbledon, London, strikes a chord with recent events in Carmarthenshire and Pembrokeshire, where in both counties the cuts-bedevilled local authorities spent thousands of pounds and hours of staff time devising special, favourable pension arrangements for top officers.
In Carmarthenshire, there is also the matter of the Libel Indemnity — council funding to enable Mark James, chief executive, to counter-sue blogger Jacqui Thompson for libel. The whole libel debacle, the determination to silence a vocal critic of council practices, resonates with the efforts of Maria Miller’s entourage to block the investigation into the mortgage interest she reclaimed for her ‘second home’, and to halt the work of a journalist, Holly Watt, who was working on the story for the Daily Telegraph. Attempts to silence the critics, and with public money too, are a dangerous aspect of modern Britain.
So far, the Prime Minister has publicly backed the Rt Hon Maria Miller, MP for Basingstoke, against the Parliamentary Standards Commissioner, and by so doing he seems to condone the use of legal loopholes for personal financial gain. The story about Mrs Miller became even more serious yesterday, when Holly Watt and James Kirkup reported in the Daily Telegraph that the ‘second home’ became the ‘main residence’ before Mr and Mrs Miller sold it in February this year, for £1.47 million. This was about £1,232,500 more than the purchase price back in 1996.
Taxable capital gain? Not if Her Majesty’s Revenue and Customs accept the Wimbledon house as Mr and Mrs Miller’s main home at some point during their ownership, because one’s main home is exempt from capital gains tax, which is otherwise levied at the rate of 28% for higher-rate taxpayers. Of course, the Wimbledon residence was the ‘second home’ when Mrs Miller was claiming parliamentary allowance for it, but according to HMRC the ownership test is not onerous, only that “the property must have been your only or main home at some time during the time that you owned it”.
Tax regulations are fiendishly complex, and experts derive their livelihoods from finding and exploiting arguable loopholes in them. Loopholes might be legal, but in practice they enable people wealthy enough to employ experts to increase the financial distance between them and the rest of the population. At public expense, Carmarthenshire and Pembrokeshire county councils engaged Tim Kerr QC to counter the findings of the Wales Audit Office that both councils had spent money unlawfully, for the benefit of their top officers. In London, Mrs Miller — who as Maria Lewis was brought up in Bridgend and attended Brynteg Comprehensive School — appears to have been able to claim mortgage interest on a variable amount mortgage which in May 2005 was £425,000 (£187,500 more than the original purchase price, incidentally) and then to redesignate the property as her main residence and thus avoid capital gains tax on a property purchased for £237,500 and sold for £1.47 million.
It may be legal, but is it ethical? The Prime Minister, for one, seems to think Maria Miller’s expense claims are perfectly OK.
In our legalistic society, loopholes and ambiguities are there to be exploited for private benefit.