Ministers must pay tax on accounts advice
Wednesday 27th May 2009, 11:18AM BST.
Ministers have been reminded that not paying tax on personal accounting costs paid for by the taxpayer is illegal.
The Daily Telegraph says nine Cabinet ministers and more than 30 junior ministers have claimed tax advice on their expenses worth more than £25,000.
And in a bid to clear up any uncertainty, HM Revenue and Customs took the unusual step on Wednesday of insisting that the fees are not tax-deductible.
Under UK tax law, when someone is found to have not paid the tax they should have, penalties and interest are imposed.
inthenews.co.uk understands that HMRC is keen to impress that no-one is above the law in this respect.
In a joint statement from the Labour party, the ministers named said they were “satisfied” that to the best of their knowledge they had honoured their tax liabilities.
In its statement, HMRC said that the accountancy advice could not be written off from tax.
“It’s a general principle of tax law that accountancy fees incurred in connection with the completion of a personal tax return are not deductible,” it said.
“This is because the costs of complying with the law are not an allowable expense against tax. This rule applies across the board.”
The Telegraph also claims that at least seven ministers, including foreign secretary David Miliband, employed the husband of former minister Meg Munn – Dennis Bates – for tax advice.
On Wednesday it released the latest of its expenses exposés, revealing that Conservative MP Julie Kirkbride – the wife of Bracknell MP Andrew Mackay – paid her sister £12,000 for part-time clerical work despite her living more than 100 miles from Westminster and her Bromsgrove constituency.
Mr Mackay has already said he will not stand at the next general election and quit as parliamentary aide to David Cameron over use of his second home allowances.
In addition, West Lancashire MP Rosie Cooper claimed £915 on solicitors’ fees and survey costs on a property she did not buy, while Conservative MP for Ryedale John Greenway claimed £500 on plants and £1,900 on redecorating a home he sold on for a £280,000 profit.
Party leaders have been outlining their suggestions for parliamentary reform, with Gordon Brown unveiling plans to give constituents the power to recall MPs.
Writing in the Independent he wrote of “how by recall, redress and better representations all local people can have far more influence on local budgets and local decisions, from policing to schooling”.
In a far-reaching speech delivered yesterday, David Cameron called for the “most radical distribution of power this country has ever seen”.
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