It seems that Blears has made a tax overpayment, if Dave Hartnett's tax assessment of her zero liability for CGT is accurate.
"I've got round to asking after Hazel Blears and her cheque, which I mentioned a while back. My query was prompted by an item in the Independent's Pandora diary which claimed she was minded to hand the money over to a charity rather than see it credited to her future tax liabilities. What I've discovered rather increases the pressure on Geoff Hoon and James Purnell, who also face some property/CGT questions.
According to her office, on the day Ms Blears popped up in front of the cameras waving her cheque, she spoke to Dave Hartnett, the permanent secretary for tax at HM Revenue and Customs. Mr Hartnett is, in effect, the country's top tax man. He worked out for her what her capital gains tax liability would have been had she been liable for one. However - this is the crucial bit - he assured her that she was not liable and therefore did not have to pay the cash. Ms Blears, in line with the point she has made that her constituents aren't impressed even if it was legal (no kidding), decided to pay the cash anyway, and was given a special dispensation to do so. The cheque was walked around to HMRC headquarters that evening and handed over to a senior official, who had stayed behind to receive it.
The cheque has been cashed, I'm told by Ms Blears' advisers, and is now sitting in an account at HMRC. What happens to it now is unclear. If it goes into the general Government account and therefore becomes available to pay for hospitals, nuclear weapons, or police uniforms, Ms Blears will be happy. But if HMRC rules that it can only be credited to her by offsetting it against her future liabilities - in effect repaying her the money - she will make an equivalent contribution to a charity.
Which is why all eyes are on Messrs Hoon and Purnell to see how they respond. Ms Blears has set them a precedent."
Tax does have to be taxing.
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