Deputy Prime Minister Angela Rayner is at risk of a fine from the tax authorities in addition to having to pay an additional £40,000 in underpaid stamp duty, tax experts have said.

Rayner, who is also the minister in charge of housing, has admitted she paid less in stamp duty on her £800,000 flat in Hove, East Sussex, than she should have done, claiming she was badly advised.

HM Revenue and Customs (HMRC) can levy penalties when tax has been underpaid if someone has been “careless” with their tax affairs.

Any penalty for Rayner, which is typically 20% or 30% of the underpaid tax, could hinge on whether she took appropriate legal advice.

Rayner has said she was misinformed by lawyers, but questions have been raised about whether she sought specialist tax advice.

Even if she did, she could still face a fine likely to be 30% of the underpaid tax, meaning an additional £12,000.

“Someone has made a big mistake. Whether it’s the law firm acting for her on the purchase, or whether it is her,” said Sean Randall, an independent stamp duty expert.

He said she was at “significant risk” of a penalty because blaming an adviser may not be a sufficient defence.

“She might say I relied on my tax advisers to advise me correctly. And I definitely sympathise with that [but] usually simply relying on your adviser is not a defence for a penalty of carelessness,” Randall added.

The dispute centres around a three-bedroom flat in Hove, East Sussex which Angela Rayner bought for £800,000 in May this year.

When she bought the flat, she declared that it was the only property she owned, meaning £30,000 of stamp duty was paid, rather than the £70,000 due if it is a second home.

She claimed it was the only home she owned because she had previously given up her stake in the family home in her constituency in Ashton-under-Lyne, Greater Manchester.

Rayner had bought that property with her then-husband, Mark Rayner, in 2016.

As she outlined in a statement, in 2020 a trust was set up under the instructions of a court to manage a payout for a medical incident which had left their son with life-long disabilities.

In 2023, when her divorce from Mark was finalised, the pair elected to place part of their stakes in the home into their son’s trust, for which they are among the trustees.

This was to enable a “nesting” arrangement, meaning the children could remain in the family home while the parents alternated living there.

Rayner sold her remaining 25% stake in the home to her son’s trust in January this year, for which she received £162,500.

The trust had been set up by Shoosmiths, a major law firm which offers advice on many areas of law including tax and property.

But when she purchased the flat in Hove , she sought legal advice from a different, unidentified firm.

In a statement, a spokesperson for Shoosmiths told BBC News that they “did not act for the Rt Hon Angela Rayner in relation to the purchase of her Hove property and/or the [stamp duty] aspects of that property.

“Ms Rayner is not a current client of the firm and has not been for some time.”

Rayner’s team have not provided details of the law firm she used instead, and it is not clear if this was a conveyancing lawyer who specialises in property transactions or more specialist tax advice.

Rayner said that when she bought the Hove flat, “my understanding, on advice from lawyers, was that my circumstances meant I was liable for the standard rate of stamp duty”.

This was because she had no financial stake in the Ashton home, even though her children remained there and she considered it her main residence. She also spends time at a government-provided flat in Admiralty Arch, central London.

However, this legal advice was wrong. This is because under tax law, if a property has been placed into trust for the benefit of children under 18, the parents of those children are deemed to be owners of the home for stamp duty purposes.

“If you have a trust in favour of your children, then it’s treated as your property,” said Dan Neidle, founder of Tax Policy Associates and a member of the Labour Party.

“We’re talking about a deeming rule which deems a person, in this case Angela, to own a property in the stamp duty world…in circumstances [where] she doesn’t own it at all in the real world,” Randall added.

The question of what legal advice Rayner took when she bought the Hove property is crucial.

If it was simply a conveyancing lawyer with no tax expertise it is likely to be much harder for her to argue that she hasn’t been negligent – and to avoid harsh penalties levied by the taxman.

“My suspicion in this case…is that she didn’t give all the circumstances of the trust to the conveyancing lawyer,” said James Quarmby, head of private wealth at Stephenson Harwood.

“The conveyancing lawyer may have just asked the bland question ‘do you own any other properties?’ And she says ‘no'”.

He said property lawyers typically state in their contracts that they don’t provide tax advice.

Quarmby said he believed there was a “high” risk of Rayner being fined and that tax officials would want to see the advice she relied on and details of the instructions she had given her lawyer

“Relying on advice is not a complete defence – it must be reasonable to do so in the circumstances and that advice cannot be ‘obviously wrong’,” he said.

“Someone in the Revenue now with the whole glare of the UK’s media on them is going to make a decision as to whether Rayner was careless,” he said.

“If she gets a penalty for carelessness she is politically screwed”.

Another key question – if the legal advice sought was from a conveyancer – is whether Rayner even mentioned her son’s trust and the role it played in the ownership of her family home.

A spokesman for Rayner declined to answer these questions.

“If you’re buying property and you have complicated affairs involving a trust, you need to speak to a tax adviser and tell them about the trust,” Neidle said.

“If she did that and they got it wrong, {it is} not her fault. But if she didn’t go to a specialist or didn’t tell them about the trust, I think it was her fault,” he added.

“I think a normal person with any sophistication would realise they should mention the trust when getting advice about something else. And a deputy prime minister who’s already got into a previous tax scrape involving properties, surely should have a go.”

He said this would also affect how HMRC levied penalties on the underpaid tax.

Rayner now faces an inquiry by the standards watchdog.

She has previously been critical of tax avoidance and also called former Conservative chancellor Nadhim Zahawi’s position “untenable” when details emerged that he was in dispute with HMRC over his tax affairs.

Zahawi, who was forced to resign as Tory party chairman for failing to declare that he paid a settlement to HMRC, ended up paying £5m to settle the dispute – a sum which included a 30 per cent penalty for being “careless”.

A similar verdict on Rayner’s conduct from Sir Laurie Magnus, the independent ethics adviser, or from the tax authorities may prove politically fatal.