The Guardian notes:
Tax inspectors are attempting to bar MPs from claiming thousands of pounds a year to hire accountants to file their expenses, arguing that the current arrangements subsidise their personal finances rather than their work in parliament.
HM Revenue and Customs is embroiled in a dispute with the expenses watchdog, the Independent Parliamentary Standards Authority (Ipsa), which is defending the right of MPs to employ a professional to fill in expenses forms and tax returns for their offices and insisting that the cost — up to £5,000 a year for each MP — should be tax deductible.
This is an absurd case for HMRC to take. MP's have to run multiple offices with their own employees and inevitably complex expenses that are now subject to appropriate scrutiny. To argue that the inevitable and essential cost of preparing the resulting accounts and tax return is not deductible is simply absurd.
There are occasions when HMRC should learn what fights to take on.
If they'd got Vodafone and other cases right they might have an excuse for being pedants. But they didn't and they aren't addressing the tax gap in any serious way either and yet, as ever, are picking on easy targets. Such measures simply discredit them. And rightly so.
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HMRC may see this as the “thin end of the wedge”. Once MPs can claim a tax deduction for the cost of completeing tax returns, why shouldn’t everyone else? Yes, I am sure there are good arguments to be made, as you have done, but those people who are paying for tax returns and getting no relief for the costs won’t buy it.
I’d personally argue that a flat rate deduction for having a tax return prepared would be a good idea – as long as it was spent, of course. The benefit of increased compliance would far outweigh the cost
Lets think how that will work – one person gets tax returned prepared and told they should have been paying more than than they have been, they figure I haven’t been caught yet and carry on submitting as before. The next person gets tax returned prepared, and finds out they haven’t been claiming all they could have, now claims it and the cost of the tax advice.
Surely it is a net loser for HMRC?
How much do you think tax advice costs?
I have set a low limit
[…] 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 […]