The print version of the story includes a copy of the invoice addressed to the Rt Hon A M Darling. The total fee note is for just £650 (plus VAT) for "all taxation advice and services for the year ended 5 April 2007".
I'm not sure what's worse:
- The simple fact that he sought reimbursement of his accountants' fees - On what possible basis could he have considered these fell within the rules for MP allowances? [edit: I have examined this in a subsequent blog post]
- The relatively low charges on the accountants' invoice - it's likely they are subsidised or else it must be a very small firm. Either explanation raises further questions.
- Mr Darling's attempt at justification for his claim - “Like many MPs, I employed an accountant to prepare tax returns for each of the years in question to ensure that the correct amount of tax was paid.”- The implication here is that the Chancellor thinks that all and any MPs who use accountants should be claiming reimbursement of accountants' fees. This is outrageous as HMRC's guidance for MPs and Ministers is quite clear that tax relief is not available for such fees.
- The attempt at confusion by a senior official who denied that the Cabinet ministers who claimed for accountants’ fees had been cheating the public - “This is not for their personal or family finances. It’s specifically for their office costs, which have to go on their self assessment forms. This is actually about Cabinet minister behaving responsibly and making sure they are honouring their tax liabilities as they should.” This has the same implications as does the Chancellor's statement above.
- The inclusion on the fee note of charges for:
- "Taxation advice and services... in connection with your duties as an MP, Minister of Trade and Industry and Minister of Transport." - One wonders what 'taxation advice' was required in this context.
- "Application for the renewal of deferment of Class 1 NIC" - this suggests that Mr Darling had another employment as well as his role as an MP. You can only claim to defer Class 1 NICs if you have more than one employment and want to avoid paying more than the annual maximum of NIC across all of your employments. Or is this another example of a special rule for MPs? [edited: A comment added below suggests that the second job is that of Minister of state]
- "Advice regarding the treatment of rental expenses against income" -this suggests that Mr Darling sought and received specific advice as regards the extent to which he could offset property related costs against rental income. Do we know to which property this relates?
- "Checking coding notices as they are issued, particularly in relation to your benefits in kind" - How many Coding notices did the Chancellor receive that year and which benefits in kind appear on there. From other disclosures in recent days it seems that all expenses and allowances are tax free so wouldn't appear on the Coding notice. Or were some there and the accountants asked for them to be removed and not taxed?
According to The Telegraph Mr Darling was not the only Minister to be reimbursed for his accountants' fees. At least 8 other ministers are implicated.
For the rest of us the rules are quite clear. 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'.
Only the self employed can claim tax relief as the accountants' work and advice is deemed to be part and parcel of preparing the annual accounts. And the costs of preparing business accounts are tax deductible. This facility is explained in HMRC Business Income Manual at BIM46450 and HMRC Enquiry Manual at EM9010.
What do you think about this latest revelation?