Angela Rayner could be sidelined politically for years while officials investigate her tax affairs.
The former deputy prime minister was forced to quit the Cabinet last year after failing to pay £40,000 in stamp duty on a luxury apartment in Hove, 260 miles from her Ashton-under-Lyne constituency.
Labour MPs say she is ‘on manoeuvres’ to launch a potential leadership challenge if Labour suffer a wipeout in next month’s local elections.
But new figures have revealed that HM Revenue and Customs investigations into allegations of unpaid stamp duty typically take between two and three years – potentially leaving her on the sidelines until 2028.
Ms Rayner is said to be increasingly confident that she can escape without a fine after taking new legal advice.
But allies acknowledge it would be almost impossible for her to mount a leadership challenge until she has settled her affairs with the taxman. They are pushing for the tax probe to be completed by May.
Official figures released under freedom of information laws show that HMRC took an average 27 months to investigate stamp duty cases. This was the best performance in five years. Cases closed the previous year had taken an average 43 months to complete.
Allies of the former Deputy PM insist her case could be dealt with more quickly as the average covers a number include complex cases and examples where people are refusing to cooperate.
Frustrated: Allies of Angela Rayner accept she cannot challenge for the leadership until her tax affairs are resolved
Ms Rayner is said to be frustrated by the length of time the investigation has already taken following her resignation from government seven months ago.
But Labour opponents believe the tax row will continue to dog her even if it is eventually settled.
One source said activists would not want to risk further controversy following the row over Keir Starmer’s disastrous decision to appoint Peter Mandelson as ambassador to the US.
‘Will Labour members really want to risk replacing one scandal-hit prime minister with another?’ the source said. ‘I don’t think so.’
Ms Rayner resigned in September last year after it emerged that she had failed to pay the punitive second home rate of stamp duty on her £800,000 apartment on the south coast.
She initially said it should not have applied, but expert legal advice later found that due to complex arrangements surrounding a trust for her disabled son, the Hove flat should have been considered to be her second home – meaning she should have paid an additional £40,000 in stamp duty.
The PM’s independent ethics adviser Sir Laurie Magnus found she had broken the ministerial code by failing to take expert advice at the outset, despite being advised to do so.
Ms Rayner said she took ‘full responsibility for this error’, adding: ‘It was never my intention to do anything other than pay the right amount.’