Contractors might be forgiven for thinking that our elected representatives at Westminster, arbiters of morality over all matters fiscal and gleeful proponents of the ‘we’re all in this together’ philosophy, are morally repugnant tax avoiders and clearly not ‘in it’ like the rest of us.
After all, a freedom of information request by the Guardian has revealed that MPs are insisting that they can claim accountancy costs of up to £5,000 each year that ordinary employees cannot. And by claiming said expenses they can avoid paying tax, cutting their tax bills by as much as £2,000 each year.
Furthermore, accountancy experts have told Accountancy Age’s Calum Fuller that there is “no statutory basis” that allows MPs to deduct such costs as business expenses. “I'm not convinced an MP is trading,” David Mellor, a tax partner at accountant Crowe Clark Whitehill, told Fuller.
Even HMRC, for once, is on the side of the angels. In letters obtained by the Guardian, HMRC has repeatedly told the Parliamentary expenses watchdog, the Independent Parliamentary Standards Authority (IPSA) that: “Other employees are not allowed to claim back professional fees or the tax, and MPs should not be given special dispensation.”
A senior HMRC official told IPSA director of policy John Sills that: “Such expenses will not qualify for a deduction under section 336 ITEPA [Income Tax Earnings and Pensions Act 2003] as they are not incurred wholly, exclusively and necessarily in the performance of the duties of employment.”
Surely you can’t get much clearer than that? Yet MPs are fighting this all the way, and doing it through the ‘independent’ body set up in the wake of the exposure of criminal expenses claims by MPs.
What does this say about MPs right now?
- That they have not fundamentally changed their outlook over claiming costs since the House of Commons expenses scandal broke in 2009, leading to some of their number being imprisoned
- That they are exercising the same degree of hypocrisy and double standards as when the rules on tax evasion did not appear to apply to them after fiddling their own expenses, and that they are trying to incorrectly impose on public sector contractors with the off payroll rules
- That they are out of touch with the impact of the very laws they create, and which in theory should also apply to their own employment and tax affairs, to the extent that they ignore the very clear direction of their own tax law enforcement agency.
So, it seems that we are not all in this together after all. Our elected representatives continue to exploit an exclusive tax avoidance scheme only available to residents of planet Westminster.
Doesn’t that, by their own reasoning, make MPs morally repugnant tax avoiders?