Last week I explained that, in the squalid furore over MPs' allowances, a crucial point was being missed. The reason why all our MPs had been expecting us to pay for their duck houses, moat-clearing, third homes and the rest was that ever since 1971 they have been told to regard their "additional costs allowance" as part of their salary. The system was cynically devised as a way to give them a hidden pay rise. As the yearly "allowable" figure soared from its original £187.50 to its present £24,000, this led to a double deception, as they were encouraged by the fees office to put in every kind of daft or bogus invoice to "justify" their claims. My point was confirmed by the admirable Kate Hoey when, on Sunday morning, she approvingly held up my column on BBC One's Andrew Marr Show.(Curiously enough, when I wrote that there were "honourable exceptions" to the generally degraded state of our MPs, hers was the first name in my mind.) But there is a further nasty twist to this story. Normally, when any of us are given perks in lieu of salary, the taxman insists we should pay tax on them. Not so, in the case of MPs. Hidden away as Section 292 of the Income Tax (Pensions and Earnings) Act 2003 is a clause headed "Overnight expenses allowances of MPs". This rules that there should be "no liability for income tax" for MPs on the "overnight expenses allowances" given for the "purpose of performing their parliamentary duties". Furthermore, it is up to them how loosely this should In other words, the Government that, under the same Act, insisted that "council members and civic dignitaries" must be "treated in the same way as any other individual who holds an office or is an employee", gave MPs a unique exemption from the tax rules. This was the same House of Commons that insisted the Queen should pay income tax. Thus was a whole new dimension craftily added to the nest-feathering of our political class.MPs' expenses: How MPs voted to tax the Queen ? and quietly exempted themselves
Normally, when any of us are given perks in lieu of salary, the taxman insists we should pay tax on them. Not so, in the case of MPs, says Christopher Booker.
be interpreted.
Sunday, 31 May 2009
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Part of me is glad they have screwed up so royally (no pun intended). At least the chance of change is now more tangible than ever before, plus Labour is likely to be in a subdued opposition position until the next generation of voters come along who have never experienced a Labour party government to be smooth talked into voting for them again.
The die hard 22% will always vote labour regardless of their crazy ideas.
I would imagine Her Majesty smiling a little more often when she reads of the politicians squirming under the glare of expense revelations!
I got my car fixed for $5.00 and would not dream of wasting time claiming this from my employer even tyough it would be within the rules. Do not MP's have a shred of common sense? if not why are they there?
One other thought.
Since politicians seem so keen now to want to restore our trust in them, they should engineer some time in the Parliamentary schedule to raise and pass a Bill to rescind not only s292 IT(P&E) 2003 but also ALL sections in all other Acts which exempts or in any other way limits their exposure to tax liabilities that apply to the rest of us.
Doesn't need to be a long winded coverall, just an Act comprising two sentences which state "Members of the House of Commons and Members of the House of Lords shall be liable, without implicit or explicit exception, to all taxes, income and capital, which apply to the general population. This Act shall have retrospective effect to include all remuneration remitted to Members of the House of Commons and Member of the House of Lords since the inception date of the House of Commons Fees Office".
That's almost cathartic! Cut the crap, clarify the expense "rules" insofar as tax is concerned, put everything on a level playing field ... and not a lawyer in sight.
Instead of taking 10 days off for Whitsun, if they had any sense of contrition and real determination to start to put this right, MPs would be in the House tomorrow working on this.
The point is that MPs can't have it both ways.
If expenses are a part of their salary then that represents earned income and is subject to income tax and national insurance every bit as much as their stated salary.
If expenses are actually expenses, then the test under the Income Tax (Pensions and Earnings) Act 2003 is whether the expense has been incurred for the "purpose of performing their parliamentary duties". MPs and their lawyers have typically drafted that in such a vague manner that they could drive a cart and horses thru it if needed. Unfortunately for MPs, there is already sufficient prima facie evidence for those MPs already exposed for charges of tax evasion to be levelled against them.
How could a duck house possibly assist an MP for the "purpose of performing their parliamentary duties"? Or moat cleaning? Or a few tons of manure? Or repairs to burst pipes where the house is already adequately insured?
Paying the money back isn't sufficient. As judges and lawyers have elsewhere stated in the last few weeks, the crime has already been committed.
Given the secrecy MPs maintained around this whole issue until the Telegraph lifted the lid, it's reasonable to assume that (a) MPs did not disclose this income as earned income on their tax returns, and (b) alternatively did not disclose it as benefits in kind on their P11Ds. There is enough here for HMRC to launch detailed enquiries around the tax affairs of EVERY MP since the whole sorry expenses "system" was instituted. That's on top of police investigations of allegations of fraud. Fraud : "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage". s4(1)&(2) Fraud Act 2006 seems specifically applicable in this case.
The police and HMRC will take their time to bring charges but there seems little doubt that criminal offences have been committed, even though MPs have tried to draft legislation to their benefit.
"Hoist by their own petard" never seemed so appropriate.
I don't care what weasel-words clause MPs / the government slipped through buried in a Bill to enable their nest-feathering to go untaxed.
This clause breaks the spirit of every law on the taxing of allowances and expenses - and the offence is compounded by the blatant abuse of the ACA for completely unnecessary fripperies and the conspiracy to conceal money being handed over for nothing even as bogus mortgage interest with the connivance of Parliamentary officials.
The ACA was there as untaxed salary which an MP could choose to take or not. Nothing else describes better how it could be used and abused.
Every false expense should be refunded; every fraudulent one should be prosecuted. MPs remain amazed at the outcry - because they knew what ACA was and how it worked all along - it was us being deceived.
240509-11:24
We need a disinfected parliament and sack any wrong doers, the normal interpretation, not MP's interpretation of wrong doing. The shadowy figures in the Fees Office should be revealed and if they exceeded the parameters, prosecuted.
On the other hand, if an MP employs his spouse as secretary and she actually does the job, I feel, better someone you know in a sensitive job.
Until MPs are made to pay back every single penny they've deliberatley "stolen" from us, paid their due taxes for the unbelievable perks they have claimed, and are also banned from any further involvment with their parties, people will never trust them.
MPs MUST be treated the same as every other person, if they have cheated, the police and the taxman should take swift action.
In a "Nutshell" we don't want liars or cheats running this country - do we?
When can the Telegraph get stuck into the EU's vast expense budget???
Vicki Woods draws attention to differences in Brown's comments on Blears (criticised)and Hoon (supported). The bitter irony is that Hoon has amassed an attractive property portfolio at my expense, while giving the go-ahead for Heathrow expansion which will irrevocably blight my life and perhaps lower the value of my (only) house: I'm under the flight path. And of course there's the residents of Sipson and Harmondsworth whose homes will be destroyed for the third runway. Their taxes, like mine, have contributed to Hoon's property wealth. I wonder what Hoon proposes they should be paid in compulsory purchase compensation.
By the way, do you think if MPs had paid CGT, not 'flipped', not charged us for wide-screen TVs, flashy lav seats, moats etc, there'd have been enough money in the kitty to buy enough flak jackets for every soldier we've sent into battle?
Liz South-west London
The overnight expense for performing their duties still means that the expense had to be incurred. Many of these claims are double claimed or made for non existent expense and therefore a clear cut case of fraud. There cannot be a line drawn underneath this affair until this is investigated by the police and the tax office. If is is shown not to be for the "purpose of performing their parliamentary duties" it becomes tax fraud regardless of any exemptions they may think they have. The phrase "purpose of performing their parliamentary duties" also sets a limit as to whether it is eligible in that if the MP did not do the job himself and paid for it to be done before becoming an MP it he cannot claim that being an MP stopped him doing it after.
The fallacy is to regard "expenses" as "part of salary". That is corrupt.
Clearly there is a difference between the legitimate expenses between, say, an MP from Newcastle or Plymouth and one from West Ham, or a young single person and a family supporter/"bread winner". Unfortunately the Inland Revenue/HMRC has never properly recognised this for any of us punters/employees, which has all kinds of restrictive results for employment. Perhaps tjhs MP (some of) scandal will ALSO loosen up those Gestapo-like rules administered by the Revenue, which contribute to breaking up of families and/or excessive travel to work.
An abuse of power where MPs passed an act of parliament that exempted themselves from the tax rules that apply to the normal citizen.
They have also made the tax on severance pay more generous for themselves than for the normal citizen.
Every MP who voted for these clauses should be charged with an abuse of public office.
Well don't that beat all... what are we allowed tax free? Oh that's right, nothing. Because when we save in ISAs it has already been taxed! It just doesn't get any better! Can we audit the tax office too please?
NuLabour has always been jealous of the Queen's popularity - which continues despite all attempts to smear or belittle her contribution.
How strange that the media are so often fed stories about the Royal Family's use of aircraft;
But apparently the UK's ghastly Foreign Secretary now needs his own private jet.
It would be very interesting to see the costs of flying NuLabour and its teams of advisors around the world to yet more photo opportunities etc.;
Especially in view of the way that NuLabour have destroyed Britain's reputation abroad, and made Britain a target for numerous crackpot terrorist groups.