Tax inspector in row with MPs over expenses

Houses of Parliament MPs' expenses cast a shadow over Parliament in 2009

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Tax inspectors have raised concerns over MPs claiming accountancy fees on expenses, documents released under a Freedom of Information request reveal.

HM Revenue and Customs officials said they were "concerned" that the fees might amount to personal benefits - on which tax would be payable - rather than work-related costs.

But the MPs' expenses watchdog replied that they were a "business cost".

The e-mail exchanges were seen by the Guardian newspaper.

The MPs' expenses scandal, which broke in May 2009 and led to the resignation of many parliamentarians at the last general election, prompted calls for reform.

'Normal'

The Independent Parliamentary Standards Authority (Ipsa), which was set up later that year to oversee the altered system, has prompted complaints from many MPs that its procedures are too complex and that its behaviour has been heavy-handed.

Yet, in this case, it is defending their tax arrangements.

In response to a Revenue and Customs (HMRC) inquiry, it said MPs had a right to hire an accountant to fill in expenses forms and tax returns on their behalf and that the cost of doing so - up to £5,000 a year - should not be taxed.

This, Ipsa argued, was because MPs are effectively self-employed and deserved the same tax settlement as small businesses.

But, in a sometimes tetchy exchange of e-mails, which appears to have begun in July, a tax official wrote: "Even allowing for the unique position of MPs, it would be difficult to see how such an expense is necessarily incurred in the performance of their duties."

In another e-mail, they raised concerns that the MPs' costs were "personal rather than wholly, exclusively and necessarily incurred for the purposes of the member's parliamentary function".

An Ipsa spokesman told the BBC that the exchanges were "normal" and part of most organisations' annual dealings with the HMRC.

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