A blog by Jaimie Kaffash, Accountancy Age’s tax reporter
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14 Nov 2007
Is anyone else quite intrigued by the story about peers' expenses?
The story, in brief, is that our friends in the Upper House have been claiming £300 in 'expenses' a day pretty much routinely, without declaring receipts.
The Times uncovered the issue and spoke to several peers about it, some of whom were quite admirably candid.
If the rest of us did that, though, we'd get into trouble. As David Vine from GlobalExpense put it:
Chief executives and partners in City firms, just as much as ordinary employees, need to submit expense claims with receipts in order for these to be reimbursed. Claims that aren’t supported by receipts generally fall outside the scope of any tax dispensation [ie you can’t claim them as untaxed expenses] and, if they are not correctly reported and subsequently discovered by HMRC visits, may also result in a stiff fine.
HMRC's response was as follows: 'Payment of expenses is a matter for House authorities. HMRC do not comment on individual cases.'
Except this isn't an individual case, is it? It's a case of a group of individuals not submitting receipts when claiming their expenses. HMRC is only too happy to talk about groups - plumbers, contractors and so on and so on - when it feels there is a risk attached to that group.
Perhaps it is time m'Lords received an intervention letter?
Visitor comments
Sorry I missed this story originally. Just catching up post Xmas.
I believe that the double standards extends beyond members of the HoL - as you might expect, it's also relevant to members of the House of Commons.
But let's be clear the position is more iniquitous than it might at first appear.
If ANY commercial (taxpaying)employer allowed its employees to claim unvouched expenses there would be two likely consequences:
1- The employee would be subject to tax on the allowance as if it were additional pay (unless a specific dispensation had been granted by HMRC). This would happen only if the employer was able to satisfy HMRC that employees incurred the necessary expenses and that the employer only reimbursed the sums spent by reference to receipts and claim forms.
2 - The employer would be subject to employers NICs at 12.8% on the level of the taxable allowances.
If there is a good reason for allowing members of Parliament (upper and lower houses) to receive non taxable allowances without them having to prove they have incurred the related expenses this should be made clear. Commercial employers able to evidence similar 'procedures' should be entitled to adopt the same process.
I believe that local councillors also receive tax-free allowances too regardless of whether they incur the related expense that the allowance is intended to cover.
Posted by: Mark Lee , 27 Dec 2007
Here is a recent update on what's going on at Westminster from Sam Coates of The Times:
http://timesonline.typepad.com/politics/2008/01/new-sleaze-head.html
Posted by: Alex Hawkes , 10 Jan 2008
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