"MPs breaking tax laws" - Surprised?

Sadly, it should come as no surprise to learn that:

MPs are regularly breaking the law by failing to pay tax on their expenses, the country's chief tax inspector told the committee probing House of Commons allowances yesterday.

As is reported in the Telegraph today.

I suggested this was the case when I was interviewed for BBC Newsnight last month. I posted a note on this blog too in which I explained why I was very doubtful that MPs had paid tax on the accountancy fees that they had claimed back as expenses.

I explained this on camera in the afternoon of 26 May and the Newsnight team then contacted the MPs concerned. Later I had a call from the journalist to say that MPs and their spokespeople were claiming that they had paid the tax due. I repeated that this was almost certainly because they didn't understand the rules. Still Newsnight had to report the MPs' assertions that they had done nothing wrong. One MP's spokesperson apparently claimed that there was no problem as the accountants' fees were paid out of taxed income so it was fine to claim them back!

I feel vindicated to note that Dave Hartnett told the Commons committee yesterday that MPs were frequently breaking the rules by failing to pay up after claiming back the cost of accountants' fees for personal tax advice on their Commons allowances.

And that Dave added:

"Over the last three months I have learned more about MPs expenses than I have over the rest of my career."

Like so many of us!

I'm hopeful that HMRC will put forward some proposals to bring MPs into line with the rest of us when it comes to determining which expenses are taxable and which are not.

Would this have Government support? I think it might - for the reasons I will explain in a separate posting about Finance Bill 2010.

What do you think?