Tuesday, May 26, 2009

MPs claiming tax relief for tax advice from an MP's spouse

Yesterday we learned that the Chancellor and 8 other Ministers have been claiming tax relief for their accountants' fees. I examined this story, identified the worrying aspects of it and suggested who else could 'Do a Darling' on the TaxBuzz blog yesterday.

Today we learn from the Telegraph that Dennis Bates, husband of MP Meg Munn, has been charging ministers for the provision of tax advice. He does not seem to be a qualified accountant or tax adviser. Receipts for his charges showed his home address (rather than a business address). All the receipts for Mr Bates' services were identical and showed a charge of £345 in 2006-07 “for professional services in connection with your personal taxation affairs”.

According to the Telegraph, Mr Bates, who is Miss Munn’s paid parliamentary assistant, has also been paid from the public purse to advise his wife on her tax returns.

How much further can this story of MPs excess expenses go? I cannot recall a time when I have felt stronger about the hypocrisy and double standards that evidently exists in the minds of so many MPs.

On what possible basis can MPs have thought that it could be acceptable to seek reimbursement from the public purse for advice "in connection with [their] personal taxation affairs"?

The opening paragraph of the 2006 Green Book, that contained the rules in force when these reimbursements were claimed, clearly says:
"It is your responsibility to satisfy yourself when you submit a claim, or authorise payments from your staffing allowance, that any expenditure claimed from the allowances has been wholly, exclusively and necessarily incurred for the purpose of performing your Parliamentary duties."
I'm not sure though whether to direct my frustration entirely at MPs or at the officials in the Fees Office or at Michael Martin. Last week, in my first detailed post on the TaxBuzz blog about this scandal I set out The tax questions that have yet to be addressed. I also referred to the principles set out in the Green Book. These say exactly what we would expect. And they were last updated only a couple of months ago.

When Gordon Brown talks about MPs who may have broken "the rules", does he mean 'breached the principles clearly set out in the Green Book', or 'gone beyond the very wide and excessively relaxed detailed guidance' that seems to have driven a coach and horses through those principles?

Returning to the tax theme (as I must do on this blog) I do not accept that it is right to have one rule for MPs and another for everyone else. MPs are not the only taxpayers to find the tax rules difficult. They are not the only taxpayers for whom there are special rules. They are not the only ones who can save time and feel more confident in their tax affairs if they take professional advice. (I'm ignoring here the fact that Mr Bates does not appear to be a professional tax adviser).

As I said on this blog yesterday:
"Employees and office holders are not entitled to any relief for the fees they pay to accountants for help with their tax returns or for tax advice. If anyone else was reimbursed by their employer for such expenses they would be subject to tax on the 'benefit'."
It cannot be right, acceptable or justifiable for different rules to apply to MPs as to other taxpayers.

Do you agree?


  1. Do you think the services of this individual to help with MPs' tax returns would come within the definition of using a 'competent professional adviser' - as per the HMRC Compliance handbook para CH84540? - As discussed in your newsletter 14 May 2009.
    I doubt that a competent adviser would conclude that their fees for personal tax work could be tax deductible.

  2. Even my "partner" who goes deaf anytime the word Tax gets mentioned - knew this was a BIK.

    He was shocked that they thought this was it was not a "personal expense"....

    They seem to think that everything they pay for is just because they are an MP - We all pay for stuff so that we can do our work, keep jobs etc... but that does not mean we can all claim it all.

  3. Hopefully Mr Watts is now registered with the HMRC for money laundering purposes.

    We don't need another money laundering scandal involving the husband of an MP.

    Did I hear recently Tessa Jowell has got back with her husband!

  4. They should phone up the HMRC tax helpline and get the same experience as everyone else. Normally this is very good but I have time to write this comment because I am waiting for one the HMRC's departments to answer the phone.

  5. It is worth reading Parliament's own policy on the criminal prosecution of tax evaders in the context of this latest revelation. I find it nigh on impossible to find a reason why, in accordance with Parliament's very own longstanding policy, the offending MPs should not be subject to criminal prosecution.

    Is this a good time to remind people of what Capone was indicted for ?