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Friday, 28 October 2011
Public Standards, Private Vices
Now here's a funny old coincidence, and btw there really is such a thing as coincidence!
That ever popular star turn at Parliament, Dave "Jack" Hartnett, was a guest at yesterday's House of Commons Members' Expenses Committee. He spoke about the Parliamentary Standards Act 2009.
Chairman Adam Afriyie asked a rather pertinent question about whether HMRC addresses MPs' taxation in the same manner as they do the wider general public.
Jack gave a rather "interestingly" phrased answer, noting that HMRC's objective is to treat all people the same in terms of the quality of their service.
Note, "objective" is not the same as saying that everyone "IS" treated equally.
Jack went on to give the caveat that MPs are clearly unique in their requirements (I bet that stroked a few egos in the HOC) and, as such, require some specific dispensation.
The committee was particularly interested to know as to whether, in the eyes of HMRC, MPs are considered to be self-employed, employees of Parliament or office-holders.
Jack declared that HMRC couldn't think of a group to whom the term ‘self-employed' was less applicable, and that the logical place in HMRC's eyes was to classify MPs was as office-holders.
Anyhoo, this is all very interesting I hear you say, but "what is the coincidence to which you refer Ken?"
Well, I am glad you asked me that; for you see an enquiry about whether HMRC treats MPs differently from the rest of us could not have come at a better time; given what happened to "poor old" Vince Cable (Business Secretary) this week.
Vince (who has a bee in his bonnet about tax avoidance) failed to register freelance earnings for VAT (wrt his publishing, media appearances sidelines) until the error was detected and rectified back in February.
Cable's accountants, once they spotted the £25K VAT error (gross before deduction of charitable gifts) error accountants fessed up to HMRC, and HMRC fined him £500.
I don't doubt that this was a pure and simple "cock up". However, I do wonder about the mechanics of this cock up:
- If there were no invoices for his fees/royalties, how will he satisfy HMRC as to the adequacy of his financial records?
- If invoices were issued, was VAT added? If so, what VAT registration number did he use? (trick question, because he wasn't registered for VAT)
- If no VAT was added, then his taxable income will have been overstated etc etc.
Anyhoo, whatever the mechanics of this cock up, I do wonder what HMRC's attitude (and size of fine) would have been had "Joe Public" made a similar cock up?
A very harsh, and excessively brutal assessment of this cock up could lead some to treat this as "evasion".
What do you think?
Comments, as ever, very welcome.
Here, btw, is a link to a video of Jack speaking at the committee Jack Speaks.
Tax does have to be taxing.
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