TaxCorporate TaxTax inspectors in MPs’ expenses dispute

Tax inspectors in MPs’ expenses dispute

The taxman and the Independent Parliamentary Standards Authority have clashed over MPs' business costs

MPs SHOULD NOT be able to claim costs for hiring accountants to file their expenses, according to tax inspectors.

They argue existing arrangements subsidise MPs’ personal finances, rather than their work in parliament.

As a result, the taxman is involved in a dispute with the Independent Parliamentary Standards Authority (IPSA), which is defending the right of MPs to employ an accountant to complete expenses forms and tax returns for the office, with the costs – approximately £5,000 per year – tax deductible.

A series of letters exchanged by the bodies demonstrate HM Revenue & Customs told IPSA on several occasions that MPs and other employees were not eligible to claw back professional fees or tax.

The correspondence, which emerged through a freedom of information (FoI) request, became increasingly impatient, with IPSA insisting MPs are similar to small businesses, which are entitled to claim such costs. As a result, the two bodies have reached stalemate and are unwilling to cede any ground.

Despite the taxman’s insistence that “the expenses are not paid under the terms of any dispensations issued to IPSA, so we require such payments to be reflected under P11D [HMRC’s expense declaration form]”, IPSA replied that the body “does not consider that expenses for parliamentary accountancy should be taxable”.

The documents go on to show IPSA has been using taxpayers’ money to pay for items that the taxman has refused to cover.

Those items include hospitality, food and drink consumed off the parliamentary estate before 7.30pm, taxi payments home after late sittings before 1.00am and insurance payments.

IPSA is also in negotiations over “reward and recognition” payments, which are to be made to staff for good work.

The watchdog was established in 2009 in the wake of the controversy around House of Commons expenses, although it has received criticism from MPs for failing to explain the system.

IPSA says it only covers MPs’ business costs and will not pay for personal expenses.

A spokesman for the body said: “If an MP asks an accountant to go through his or her business accounts – purely the costs associated with running their offices – we would see that as a business cost.”

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