Taxman vague on peers' expenses

HM Revenue & Customs has declined to say whether it intends to challenge
peers’ tax arrangements after it emerged that many were claiming their expenses
more as salary than as itemised expenditure.

The taxman said this week that it would not say what it planned to do on the
issue, on the basis that it would breach taxpayer confidentiality, adding only
to ‘watch this space’.

It emerged this week that peers were claiming a £300 a day allowance as a
routine addition to their salary, rather than as itemised expenditure. Peers do
not have to submit receipts and many claim the full allowance every day they are
in parliament.

But tax rules state that where expenses are not itemised the sum should be
taxed as income.

‘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 may result in a stiff fine,’ said David Vine of
GlobalExpense.

Lord Paul was quoted this week saying ‘I spend more money than £300, so I put
in for the amount I can. That’s what I’m allowed to do, and that’s what I do.’

Lord Cope, a former paymaster general, told Accountancy Age this week: ‘I am
quite happy with these arrangements. If the Revenue is happy so am I. I don’t
see a problem.’

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