The Blairs stayed last week at the state-owned San Rossore villa near Pisa as guests of Vannio Chiti, the regional president of Tuscany, who refused to accept any payment.
The prime minister was criticised in the UK press and by local residents who were initially barred from a 5km of stretch of beach near the villa. Blair convinced the authorities to open the beach to the public and gave £3,000 to a local children’s hospital.
But according to Maurice Fitzpatrick, chief economist at Chantrey Vellacott DFK, the donation would only offset the prime minister’s tax liability for the holiday if he gave it to the person providing the holiday.
‘We would have advised him to ensure the payment was made to the state of Tuscany so it could be deducted,’ said Fitzpatrick. ‘Because the payment was to charity, he will be unable to deduct it. Tax is like that, isn’t it?’
Under Revenue rules, the Tuscan sojourn could be interpreted as a benefit in kind derived by reason of the prime minister’s employment. The £2,000 estimated liability was very conservative, added Fitzgerald.
‘The Revenue is taking an increasing interest in benefits in kind and I suspect there is quite a lot of under-reporting of freebies,’ he said. ‘But am sure Blair was going to report his.’
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