MPs Expenses - should HMRC be the watchdog?

So much has been said in the press recently about MPs expenses and flipping homes. Now that the fuss has, to some extent, died down it is perhaps time for a few observations (with a tax bias) on what has been going on.

• Anyone who has to work at a number of different locations can, in principle, be re-imbursed for the additional cost necessarily incurred by him or her in performing the duties of that employment including subsistence and accommodation without any tax liability arising . So far so good.
• Anyone who has two homes can, as a matter of tax law, elect which of these homes is to be exempt from capital gains tax for any particular period.
• An employee cannot, under any circumstances, have his employer pay for the cost of completing his income tax return without a taxable benefit in kind arising.

MPs expenses are, we are told, to cover costs incurred to enable them to do their job, but surely as with the tax rules this should be the extra cost over and above what they would incur in any event.

It seems to me, therefore, that the best way to deal with the debacle about MPs expenses is to have the expenses claims all made available to the tax office that deals with all MPs and to let HMRC judge whether the expenses have been incurred wholly, exclusively and necessarily in the performance of their duties as MPs, using the same yardstick that HMRC apply to the general body of taxpayers.

If the expenses pass the test, then no problem. If not, MPs can either re-imburse the excess or pay tax and NIC on it.

MPs may bleat that their expenses have been approved by the Fee Office but they are still, as far as I am aware, subject to the same tax rules as the rest of us. There is no problem with security or confidentiality or with independence.

On the topic of CGT on their houses, I have to side with the MPs. They are only doing what any other taxpayer can do unless, of course, the second property is used exclusively for business purposes.

If a property or any part of it is used exclusively for business purposes then the CGT exemption doesn't apply to it/that part of it. If all of the costs of running their second property are being claimed by an MP that implies that the property is only used by them for carrying out their Parliamentary duties and is used only for business. So no exemption and one again for the tax man to sort out.

Strenuous efforts have been made over the years to persuade government to give tax relief for the cost of completing income tax returns. So far the pleas have fallen on deaf ears. Reports of MPs claiming the cost of preparing their tax returns and even taking tax advice as part of their Parliamentary expenses must be one for the tax man. If the rules allow that cost to be claimed then that is fine as long as they pay tax on the benefit like the rest of us would have to do.