Flipper Hazel Blears and the £18k tax bill that never was
By Ian Gallagher
Last updated at 11:25 PM on 09th May 2009
Climbing the ladder: Hazel Blears now lives in a London flat which she bought five years ago
Cabinet Minister Hazel Blears was facing fresh questions last night after it was revealed she did not pay tax on the sale of her former London home.
The Communities Secretary sold the flat in Kennington for £200,000 in August 2004, earning her a £45,000 profit. She had claimed expenses on it by declaring it a second home.
Normally the profits on any property which is a second home are liable for capital gains tax (CGT) of up to 40 per cent. In this case that would have been about £18,000.
Her spokesman confirmed last night she did not pay CGT after advice from the taxman because for most of the time when she had owned it the flat was her main home.
But Miss Blears had told the Commons Fees Office in April that year that the flat was her second residence – enabling her to claim £850 a month for the mortgage.
The controversy follows criticism of Miss Blears last week over the practice of ‘flipping’, where MPs change the designation of their second home to net maximum allowances.
She is known to have ‘flipped’ status three times in a year – enabling her to claim up to £20,000-a-year for each property. Last week she said: ‘I have only ever had one small one-bedroom flat in London. I live here in Salford [her constituency] but to be an MP I have to have somewhere to live in London.’
But Land Registry records reveal that since becoming an MP in 1997 Miss Blears has owned three flats in London and has sold the first two.
As a result she has climbed the property ladder. She now lives in a flat in Clerkenwell, Central London, worth about £500,000 – some £200,000 more than she paid five years ago.
But despite claiming thousands in subsidies on it, none of her neighbours who spoke to The Mail on Sunday could recall seeing her there.
In June 1997, a month after being elected, Miss Blears bought a house in Salford for about £130,000. It is now worth about £300,000.
In March 2004 she designated it her second home and during that month she spent £850 on a Selfridges TV and video and £651 on a mattress from Marks & Spencer.
Home truths: Miss Blears now lives in this £500,000 Clerkenwell flat
By this time, she had already bought and sold one London flat in a converted Docklands wharf and was living at her Kennington property, in an area traditionally favoured by MPs because of its proximity to Westminster.
In April 2004, having bought furnishings at public expense for the Salford house, she made Kennington her second home – and claimed £850 a month for the mortgage. That August she sold it for a £45,000 profit.
But a source close to her insisted the sale was not to do with making money, but because the flat stood on a busy road and the ‘sirens at night were keeping her awake’.
Between September and October 2004 Miss Blears stayed in hotels at taxpayers’ expense, including two nights at the £211-a-night Zetter Hotel in Clerkenwell. Then, in December, she bought another London flat with her husband for £300,000 in Clerkenwell. It is now worth nearly £500,000.
After moving in she claimed a monthly mortgage of £1,000 and a grocery bill of £400. In the next four months she spent £4,874 on furniture, £899 on a bed and £913 on a TV, the second set paid for by the taxpayer in less than a year.
In March 2006, in the run-up to the deadline for claims, she spent £668 on bed linen and curtains, £439 on crockery and kitchen equipment and more than £200 on towels.
In 2004/05 she spent only £94 less than the then maximum permitted of £20,902. In the past two financial years she has claimed the maximum. Yet it is unclear how much time Miss Blears spends at the flat.
Homes from home: Hazel Blears flipped between declaring her Salford house, above, and her Kennington flat, below, as her second home
Her next-door neighbour, who has lived there for five years and sits on the board of directors that manages the block, had no idea she lived there.
He said: ‘You would think if she lived next door I would have seen her at least once by now.’
Ironically, next door to her block is a building housing the Centre for Public Scrutiny, an organisation that ‘promotes the value of scrutiny and accountability in modern and effective government’. Another neighbour, Mine Gundogdu, who has lived there for three years, examined photos of Miss Blears but did not recognise her.
‘I cannot remember ever having seen this woman here. To be honest I was not even aware that a Government Minister lived here. That would be quite a high-profile resident and the neighbours chat so you would at least know she lived in the building.’
A spokesman for Miss Blears insisted she had ‘complied with the rules of the Commons authorities and the Inland Revenue’ during the sale.
He added: ‘When she became a Minister she was told by the Fees Office that her main residence had to be her London home. She wanted her Salford home to be the main one and lobbied hard to get the rules changed – which she did. That is why she switched.’
He added: ‘All her claims for allowances are in line with the rules, and approved by the Fees Office.’
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