MPs’ expenses come under spotlight again as Taxman challenges accountant claims

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By a Newsnet reporter

The body set up to scrutinise MPs’ expenses is attempting to block HMRC in a dispute over whether public cash can be used in order to pay private accountant bills.

The Independent Parliamentary Standards Authority (Ipsa), is defending the use of taxpayers cash by Members of Parliament who are allowed to claim up to £5000 per year to pay accountants to file their expenses claims.

The dispute emerged after a Freedom of Information request revealed that HMRC inspectors had warned that paying the fees amounted to a subsidy on an MP’s personal finances.

According to the Guardian newspaper, tax officials have repeatedly told Ipsa that MPs are not allowed to claim back professional fees or the tax, and should not be given special dispensation.

A spokesman for Revenue and Customs said: “We can’t comment on individual cases but it’s well understood that the costs of completing a personal tax return are not tax deductible.  This applies across the board.”

However in a bizarre defence, Ipsa have claimed that MPs should be treated like small businesses which are allowed to reclaim the costs.

One MP who has made use of the system was Labour MP Jim Murphy who became Secretary Of State for Scotland in 2008, and claimed almost £2000 of public cash in order to pay private accountants to handle his tax returns.

Information uncovered by the Guardian newspaper also showed that the Ipsa was using taxpayers cash in order to subsidise hospitality, food and drink, insurance payments and private taxi hire for MPs – all areas where HMRC has refused to grant MPs special dispensation.

The use of taxpayer’s cash by the very body brought in to police expense claims, to subsidise expenses already refused by tax inspectors will cause anger at a time of severe austerity measures and cut-backs.

The standoff has the potential to re-ignite the controversy that surrounded MPs’ expenses in 2009 which was also sparked following a Freedom of Information request.  The subsequent publication of MPs’ expense claims led to a public outcry and several MPs were eventually convicted and sent to prison.