TaxCorporate TaxTax us if you can

Tax us if you can

You couldn’t exactly say it’s the biggest problem the government is facing, but the row over John Prescott’s tax arrangements does pose a serious threat to the government’s authority.

The Telegraph reports today that John Prescott is facing questions from advisers, Mike Warburton of Grant Thornton and John Whiting of PwC being those quoted, saying that he should pay tax on the use of grace and favour homes he lives in.

Broadly speaking, the tax rules say that you are taxable on such properties unless they are crucial for work in various respects. Prescott’s use of the houses when he doesn’t do the job any longer poses serious questions as to whether he is, or should be, paying tax on them.

It will not be long before MPs are involved in asking precisely what is going on. The Cabinet Office says all rules have been followed and that such houses are necessary for security and so on. Advisers says their clients have been hounded for more convincing reasons than those publicly advanced.

There is, in this respect, apparently one loophole that applies. Chevening, the Kent retreat for all foreign secretaries past and present, is exempt according to an act of parliament, apparently. Though it seems unlikely, the government could introduce an act to extend that exemption.

There is a broader point too. This is a government which has pushed hard on tax issues, avoidance and proper corporate behaviour.

Getting around tax rules is unacceptable and unfair to the majority of taxpayers who pay their fair share. A phrase, I should add, that is not my own but, (apart from the first four paraphrased words), those of Dawn Primarolo, the paymaster general.

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