There's a lot of fuss about MP's trying to claim the cost of preparing their tax returns this morning. HMRC are resisting, now Parliament says they are right to claim. I happen to think they're right to do so. MPs have little choice but incur this cost. Why shouldn't they have tax relief for it if it is imposed on them to be tax compliant?
But let's go a step further. Over the last few years HMRC have made life very difficult for anyone not trained in tax to get their tax return right. They've been shutting local tax offices as fast as they can. Only 50% of calls to their call centres have been replied to. Even fewer give rise to accurate responses because far too little training is given to the people who work there though no fault of their own. And let's be honest, doing a tax return is not always straightforward.
So why, since HMRC and the government have abandoned their responsibility for helping people get their tax right, shouldn't there be a flat rate deduction for those seeking to get their tax return right?
The self employed have this relief by concession now.
MPs did have it.
My argument is that a flat deduction if the return is prepared by a registered and regulated tax agent who submits it electronically of say £250 plus VAT would be fair for anyone. And because tax returns would be better prepared (you would hope) then HMRC would get a benefit too.
How about it?
Either that, or reopen tax offices who will really help people get the return right, face to face: that's the choice, I think.
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I think I have to take serious issue with you here Richard. You say “HMRC are resisting, now Parliament says they are right to claim.”
In fact that is not right. Parliament has said (in the relevant tax act) that employees may deduct expenses wholly, exclusively and necessarily incurred in the performance of their duties and where obliged to incur and pay the expenses as a holder of the employment.
MPs are not in business with respect to their offices as MPs, they are office holders, so it is not appropriate for them to be treated otherwise than as employees for tax purposes.
It is the independent body IPSA that is seeking a departure (in effect by way of HMRC concession) from the clear stated will of Parliament. That, to my mind, falls quite squarely into your definition of tax avoidance, being a tax treatment that is not that clearly expressed (and one would assume therefore not intended) by Parliament. There are detailed provisions that apply to MPs tax set out in the same act, so I suggest one is entitled assume Parliament has considered the tax position of MPs in detail.
As to your statement that MPs have little choice in incurring the cost: first I believe that is not (objectively and within the meaning of the relevant tax act) true and, even if it is true, it is no different to the position of employees in general. Many employees have no choice incurring all sorts of different costs related to their employments from which objectively they derive no personal benefit at all — they get no tax relief on them but are not treated as a special case as MPs are.
It is quite astonishing to me that MPs (with honourable exceptions) continue “not to get it” — they have brought our parliamentary democracy into disrepute and continue to carry on in an utterly oblivious and callous fashion. Therefore, I for one am quite happy that HMRC are challenging this — it is a fundamentally important point of principle but, given MPs are involved, my money is on HMRC losing (the money even if not the issue).
I accept much of what you say
I am also saying that this nis an area where we may need to rethink if tax is to be just in the 21 century
Many of the distinctions e.g. of employment and self employment are now so blurred that they crete absurd results
This is one such case
The schedular system on which this logic is based is by and large class based anachronism – time for it to go
But not for MPs alone….