Now that MPs expense claims are subject to some scrutiny, they find themselves in the position of ordinary mortals, contractors, small businesspeople, and the self employed, dealing with significant expenses, and having to make tax returns to HMRC.
Because the tax laws (passed by MPs) are very complex, many MPs are paying accountants to help them complete their tax returns. Welcome to the world you have created for the rest of us!
But they don’t like it and, as reported in the telegraph
they expect Accountants costs to be reimbursed by parliament, and to be tax free. Parliament (run by MPs) is happy to oblige, but HMRC has ruled that the payments are a benefit in kind, and so taxable.
The telegraph reports “An HMRC spokesman said he could not comment on MPs’ tax affairs but said: “Under long-standing and strictly applied rules relating to the taxation of employment, income tax relief is only available for general expenses if they are incurred ‘wholly, exclusively and necessarily in the performance of” the duties of the employment. “
Many of the issues faced by MPs are similar to the self employed, contractors, and those running small businesses. At Commonwealth Contractors we hope that MPs will stop asking for yet more special treatment and insulation from the laws they pass for the rest of us. Instead, like a CEO going to work on the shop floor for a day, they should treat their experience as an opportunity to understand what they have created. They are responsible for the tax system. Seeing how it works at the sharp end puts them in a better position to do their job of making the system better. MPs should ensure that they can understand their own laws and follow them without professional help. Or, at the very least, accept that they have created such a complex system that use of an accountant is a necessary cost of compliance, and make the cost tax-deductible for everyone.