Committee seeks clarification on MP taxation

The committee on Members' expenses has raised proposed taxation amendments to the operation of the Parliamentary Standards Act 2009 with representatives from Her Majesty's Revenue and Customs (HMRC).

Committee chair Adam Afriyie (Con, Windsor) opened the meeting earlier this week by enquiring whether HMRC addresses MPs' taxation in the same manner as they do the wider general public.

Dave Hartnett, the permanent secretary for tax, responded that their objective is to treat all people the same in terms of the quality of their service offering, however MPs are clearly unique in their requirements and as such require some specific dispensation.

One question of key importance to the committee was the establishment of whether, in the eyes of HMRC, MPs are considered to be self-employed, employees of Parliament or office-holders.

This was resolved when Hartnett declared that tax HMRC couldn't think of a group to whom the term ‘self-employed' was less applicable, and that the logical place in their view to classify MPs was as office-holders.

Edward Leigh (Con, Gainsborough) also sought to clarify whether the discrepancy in living payment allocations between London-based MPs and those based outside the capital could be alleviated through the introduction of a fixed, flat-rate supplement.

Leigh declared that he envisaged the supplement as being taxable, while enabling MPs greater freedom as to how the supplement would be spent.

Other proposed amendments included Nick Raynsford's (Lab, Greenwich and Woolwich) suggestion that parliamentary and constituency office costs could be centrally managed, which HMRC's Mary Aiston agreed would offer a small efficiency improvement.

Harnett closed the session by cautioning that any reforms to taxation would require additional work on both sides and would need to be carefully thought through; however, he was able to offer "a level of comfort" to the committee that a satisfactory resolution could be found.

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