05046-19 Powell-Smith v The Mail on Sunday

Decision of the Complaints Committee 05046-19 Powell-Smith v The Mail on Sunday

Summary of complaint

1. Anna Powell-Smith complained to the Independent Press Standards Organisation that The Mail on Sunday breached Clause 1 (Accuracy) of the Editors' Code of Practice in an article headlined "Corbyn 'war on homeowners'", published on 23 June 2019.

2. The article reported that the Labour Party had proposed to "grab more inheritances and tax profits on family house sales" in a report commissioned by the party entitled "Land for the Many". The article’s opening sentence stated that "Homeowners would be taxed on the increase in the value of their home under bombshell plans being drawn up by Labour leader Jeremy Corbyn". The second sentence went on to explain that "The proposal to scrap the Capital Gains Tax exemption on main homes would force owners to pay income tax on the profits when they move home – and lead to a ‘double whammy’ levy on their estates when the owners die." The article said that Boris Johnson had “described the plan as a ‘mad’ house tax which would ‘cripple every Brit who owns or wants to own their home’”. The article also quoted Shadow Cabinet Minister Jon Trickett who had “described the report as ‘ground breaking’ and ‘part of our policy development process for the next General Election’”. It also stated that the Labour Party had “insisted that the homes tax ‘was not under consideration’ for the next manifesto”.

3. The article also appeared online under the headline "Corbyn's 'war on homeowners': Proposal to grab more inheritances and tax profits on family house sales (this from the man who grew up in a 17th Century mansion)". The first subheading said “Proposal to scrap capital gains tax exemption on main homes comes in a new report commissioned for Labour”; and the second subheading said “Land For The Many proposal would force owners to pay income tax on home profits when they move”.

4. The complainant, who had been involved in the production of the Land for the Many report, said that the article was inaccurate. She said that the report did not recommend scrapping the current exemption from Capital Gains Tax for main residences at any point as reported, and in fact had rejected this policy altogether and acknowledged the controversy of such a recommendation. She noted that the report said “Applying a Capital Gains Tax to main residences too would allow us to limit the wealth inequality arising from the housing boom, but would be controversial and would make it difficult for some households to buy properties of equivalent value when moving house”.

5. The complainant also said that the article claimed that their report had cited, with approval, research from a third party organisation advocating the removal of the exemption for main residences. She said this was inaccurate as the third party research did not make this recommendation. The complainant acknowledged that the cited research stated that “This reform would involve removing most exemptions, allowances, and reliefs that currently exist for both Capital Gains Tax and dividend taxes”. However, the article had excluded a later sentence from the cited research which stated “We propose that the exemption on primary residences is retained”. The complainant said that the article was misleading by virtue of excluding this sentence. The cited research had proposed scrapping the entire Capital Gains Tax system but this was irrelevant in respect of main homes, which sit outside of the Capital Gains Tax system, and would remain so under the proposed replacement in the cited research. Further, while the report had recognised the organisation's report as sensible, it was not recommended by the "Land for the Many" report as claimed in the article; the report did not directly or indirectly support extending Capital Gains Tax to main homes.

6. The newspaper denied a breach of Clause 1. It said that the thrust of its article was accurate; namely, that the Land for the Many report had advanced the idea that property owners should pay tax that is more closely linked to the increase in value of their homes. The newspaper noted that in the words of the report one of its functions was to "discourage people from treating homes as speculative assets". The newspaper also noted that the report had described increases in property value as "un-earned windfalls" and "un-earned gains" and had stated that "taxing income derived from asset price appreciation, which requires no work to obtain, at a lower rate than income derived from Labour which requires significant exertion on the part of the worker, is intuitively unfair". The newspaper said that the report did suggest removing the exemption for main homes from Capital Gains Tax to address this issue, albeit later noting its controversy. The newspaper said that the report approved a proposal by the third party research to abolish the existing Capital Gains system through income tax. It said that the complainant's report and the report it cited proposed taxing gains through a new "progressive property tax" which was levied annually depending on the increase in the home's value. The newspaper emphasised that the proposals all amounted to taxing capital gains on house-owners' main residences; it was not inaccurate for the article to report that the Land for the Many report proposed a tax on the gains in capital value of main homes.

7. The complainant said that the newspaper's position that the "progressive property tax" represented a tax on capital gains was incorrect. The proposed tax is a tax paid on the total value of the home, levied annually, and based on regular revaluation, whereas Capital Gains Tax is charged as a proportion of the capital gains to the value of an asset, levied when that asset is sold. In any event, the report proposed no changes to the Capital Gains Tax regime for main homes.

8. Notwithstanding its position that there was no breach of the Code, the newspaper acknowledged that readers may have understood that the report proposed scrapping the existing Capital Gains Tax exemption for main residences. It offered to amend the online article and add a footnote setting out what the amendments were. It also offered to publish the following clarification in its Corrections & Clarifications column in print and online on 18 July 2019, 13 days after it received the complaint.

9. A news article on June 23 suggested the Labour Party is planning to charge Capital Gains Tax on the sale of main homes, taxing owners when they move house. In fact the Labour report, ‘Land for the Many’ does not make this recommendation. It recommends taxing increased property values by other methods. We are happy to set the record straight.

10. During IPSO's investigation, the publication offered the following wording on the same terms to further clarify matters:

An article on June 23 said Labour has plans to scrap the Capital Gains Tax exemption on main homes, taxing home-owners on increased property values when they move house. In fact this idea is rejected by the Labour report ‘Land For The Many’ which, instead, proposes a ‘Progressive Property Tax’ based on the current value of homes, levied annually and based on regular revaluation. We apologise for our mistake.

Relevant Code Provisions

11. Clause 1 (Accuracy)

i) The Press must take care not to publish inaccurate, misleading or distorted information or images, including headlines not supported by the text.

ii) A significant inaccuracy, misleading statement or distortion must be corrected, promptly and with due prominence, and — where appropriate — an apology published. In cases involving IPSO, due prominence should be as required by the regulator.

iii) A fair opportunity to reply to significant inaccuracies should be given, when reasonably called for.

iv) The Press, while free to editorialise and campaign, must distinguish clearly between comment, conjecture and fact.

Findings of the Committee

12. The Committee noted the newspaper's position that the "progressive property tax" recommended in the Land for the Many report advocated taxing gains which arose from the increase in value of main homes. However, the article reported that it had proposed scrapping the existing Capital Gains Tax exemption on main homes, when in fact it had categorically ruled this out and had proposed alternative reforms. These would see an annual levy on the increase in value of a property, which would be determined by regular valuations. This proposal was significantly different to Capital Gains Tax, which is paid on the capital gain which arises at the time that an asset is sold.

13. In addition, the Land for the Many report had not referred “approvingly” to research from a third party organisation advocating the removal of the Capital Gains Tax exemption for primary residences, as reported. In fact, this third party research had recommended the removal of the Capital Gains system in its entirety, which would have no impact on main homes given that they are exempted from the Capital Gains Tax regime.

14. The Committee was concerned that the publication had inaccurately reported information featured clearly within a publicly accessible policy document. The inaccuracy had featured prominently as it formed the central basis of the article, and it had been emphasised in the bullet points of the online version. This represented a failure by the newspaper to take care not to publish inaccurate information in breach of Clause 1(i).

15. The Committee considered that readers would understand from the article that the Land for the Many report and, by extension, the Labour Party had proposed that Capital Gains Tax be paid in respect of main residences, which are currently exempt. The Committee considered that the article could cause readers to understand that, under a Labour government, they could be liable to pay a tax from which they are currently exempt. The newspaper had published significantly inaccurate information, and a correction was required under the terms of Clause 1(ii).

16. The newspaper had offered to publish a correction in print in its Corrections and Clarifications column within 13 days of receiving the complaint from IPSO. The wording of the correction made clear that the Land for the Many report did not make the recommendations, as reported. However, given the prominence of the inaccuracy and the fact that it was the central point of the story, the Committee considered that this was insufficient to meet the requirement of Clause 1 (ii).

Conclusion

17. The complaint was upheld under Clause 1(i) and Clause 1(ii).

Remedial action required

18. Having upheld the complaint, the Committee considered what remedial action should be required. In circumstances where the Committee establishes a breach of the Editors’ Code, it can require the publication of a correction and/or adjudication. The nature, extent and placement of which is determined by IPSO.

19. The Committee considered that there was a serious breach of Clause 1(i), which was not incidental. Reporting that Labour had proposed to remove the exemption for main homes from paying Capital Gains Tax had the potential to cause serious and significant concerns for readers. The correction offered by the newspaper was insufficient to address this significant inaccuracy, which had formed a central point in the article. In light of these considerations, the Committee concluded that that an adjudication was the appropriate remedy.

20. The Committee considered the placement of this adjudication. The article had appeared on page 16, however the Committee considered that the failure to take care over accuracy was significant as to warrant publication on page 2. The Committee therefore required that its adjudication be published on page 2, or further forward in the newspaper. The headline to the adjudication should make clear that IPSO has upheld the complaint, give the title of the newspaper and refer to the complaint’s subject matter. The headline must be agreed with IPSO in advance.

21. The adjudication should also be published online, with a link to this adjudication (including the headline) being published on the top 50% of the publication’s homepage for 24 hours; it should then be archived in the usual way. The headline to the adjudication should make clear that IPSO has upheld the complaint, give the title of the publication and refer to the complaint’s subject matter. The headline must be agreed with IPSO in advance. The publication should contact IPSO to confirm the amendments it now intends to make to the article to avoid the continued publication of material in breach of the Editors’ Code of Practice. If the article remains online, the full adjudication (including the headline) should appear below the headline. The terms of the adjudication for publication are as follows:

Following an article published on 23 June 2019 in the Mail on Sunday, headlined "Corbyn 'war on homeowners'", Anna Powell-Smith complained to the Independent Press Standards Organisation that the newspaper had breached Clause 1 (Accuracy) of the Editors’ Code of Practice. IPSO upheld this complaint and has required the Mail on Sunday to publish this decision as a remedy to the breach.

The article said that a report commissioned by Labour named "Land For The Many" had proposed scrapping the Capital Gains Tax exemption on main homes, and that the same report had “approvingly” cited proposals by another research institute for primary residences to no longer be exempt from Capital Gains Tax.

The complainant said that the commissioned report did not propose scrapping the Capital Gains Tax exemption on main homes, nor did it approvingly cite proposals by another report to scrap the exemption. The publication said that while the report did not propose scrapping the exemption for main homes from paying the existing Capital Gains Tax, the article was not inaccurate as the Land for the Many report proposed an alternative tax on the gains in capital value of main homes.

IPSO found that the report had in fact rejected proposals to scrap the Capital Gains Tax exemption for main homes, and instead recommended an annual levy on the increase in value of a property. The third party report had recommended scrapping the entire Capital Gains Tax system, which would not have affected main homes by virtue of them being exempt in the first place. The inaccuracy had featured prominently as it formed the central basis of the article and IPSO's Complaints Committee considered that the article could cause significant concern to readers that, under a Labour government, they could be liable to pay a tax they are exempt from under current legislation.

IPSO found that the publication had failed to take care in reporting the recommendations made in a publicly available policy document in breach of Clause 1.

Date complaint received: 01/07/2019

Date decision issued: 12/11/2019

Independent Complaints Reviewer

The publication complained to the Independent Complaints Reviewer about the process followed by IPSO in handling this complaint. The Independent Complaints Reviewer decided that the process was not flawed and did not uphold the request for review.