HMRC may probe MPs' expenses

HMRC may be pressed to investigate the tax affairs of MPs and ministers believed to have ‘flipped’ addresses and then disclosed them as second homes to parliamentary authorities while telling the taxman they were their main addresses.

So far the taxman has been kept out of the storm over politicians’ expenses after specific oversight by the taxman was removed in 2003. But it is understood that this does not include capital gains tax.

The belief among many observers is that HMRC’s rules on what constitutes a second home for the purposes of CGT is much stricter than the definitions in use by the House of Commons authorities. Former Committee on Standards in Public Life chairman Sir Alistair Graham has questioned whether MPs’ expenses should be free of tax and the Taxpayers’ Alliance is expected to raise the issue with the Parliamentary Commissioner for Standards Sir John Lyon.

An HMRC spokesman said: ‘We cannot discuss individuals’ tax affairs,’ but added that private residence relief ‘in general’ applies to only one residence at any one time and that strict rules apply to qualifying properties and those who benefit. He said: ‘There are no special capital gains tax rules covering MPs’ homes.’

One of the cases that raised eyebrows over ‘flipping’ was that of communities secretary Hazel Blears, who claimed expenses for three properties and hotel bills in one year, though not at the same time, according to reports in The Daily Telegraph.