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.