Recent conversations with friends and colleagues have revealed that my previous post is way out of line with their views on the matter of MPs expenses, and that my view of what has become colloquially known as 'flipping' in the media, that it is an entirely legitimate form of tax mitigation, has been greeted with thinly disguised incredulity. Proof, then, that I don't choose my friends because we agree on things!
I still hold to my views on this matter, but an intriguing aspect of the expenses issue has occurred to me in the context of the new HM Revenue & Customs penalty regime for inaccuracies in tax returns, about which I have previously posted.
This new regime draws a distinction between taking reasonable care (no penalty) and carelessness (a potential penalty). In assessing carelessness, HMRC will take into account the capabilities and circumstances of the specific taxpayer. Because this is a new regime, there will no doubt be a bedding in period, during which taxayers and HMRC will, through a process of negotiation, create an informal framework for deciding where the dividing line falls between reasonable care and carelessness.
I had previously taken the view that, in assessing my capabilities as a taxpayer, HMRC would take the view that any errors on my tax return would by definition be careless, because I spend my life dealing with tax. And if they concluded that any inaccuracy was deliberate, they would try their damndest to lock me up for as long as possible, and quite right too. But now I'm not so sure............
After all, I am a mere taxation practitioner, not endowed with the necessary brainpower, stamina, vision and political nous to be a Member of Parliament. So clearly we would be within our rights to expect the highest possible standards of care from our MPs, wouldn't we?
Elliott Morley MP claimed mortgage interest payments for 18 months after his mortgage ended.
Andrew Mackay MP and Julie Kirkbride MP (husband and wife) claimed the full allowance for two London homes. Whilst I do not wish to pry into their domestic arrangements, that appears to be at least one too many, particularly as Mr Mackay is MP for Bracknell (37 miles from Westminster per the AA Route Planner), although Ms Kirkbride has the excuse of being MP for Bromsgrove.
Jack Straw MP, and Justice Minister, claimed for his full council tax payment despite the fact that he was entitled to, and received, a 50% discount.
I could go on, but I won't.
Now of course our MPs would surely never be careless with public money; indeed it is difficult to imagine many more heinous charges that could be levied at an elected representative (although John Stonehouse came up with a few, as did Neil Hamilton). And of course, as mentioned above, their capabilities and circumstances are such that the highest possible standards of care would be expected of them. So this sets an interesting precedent for dealings with HMRC's new penalty regime, does it not?
The first time that HMRC accuses on of my clients of carelessness I will happily run the above argument ; after all, what better yardstick of reasonable care in the conduct of public affairs could there be than our elected Parliamentary representatives? I think this could lead to some diverting discussions on the issue of care, and certainly my view of what constitutes reasonable care has been changed quite dramatically in favour of the taxpayer by the events of the past couple of weeks. After all, HMRC could not justify imputing a higher level of care to we mere mortals than would apply to MPs, could they?
So perhaps taxpayers who are found to have submitted inaccurate returns should be grateful to those in the House of Commons who, by their practical example, have so clearly defined the low standards of care to be expected even from those who hold the highest elected office in this country. Just think how much lower those standards must be for the man in the street, or indeed on the Clapham omnibus. And think how much fun I am going to have pointing that out to HMRC.
Mark Simpson
14 May 2009
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