How MPs can profit by 'flipping' second homes
(Jarek Bogdanowicz/Images International)
Hazel Blears could face a call from the taxman over her home 'flipping'
Anger at the way MPs have exploited their work expenses has grown over the practice of "flipping" - changing which property the member designates as their second home.
Alistair Darling, the Chancellor, Hazel Blears, the Communities Secretary, Geoff Hoon, the Transport Secretary, Michael Gove, the Shadow Schools Secretary, and Andrew Lansley, the Shadow Health Secretary, are among those who have been accused of profiting from the system.
For years, MPs have been able to claim generous housing handouts from the taxpayer, asking to be reimbursed for mortgage interest, council tax, bills, furnishings and repairs up to a maximum of £24,222 a year. The payments under the Additional Costs Allowance are only available on their second home, which should be the place that they spend the least time.
But evidence from MPs' uncensored expenses claims suggests that a number of MPs have been working the system by claiming for renovating and furnishing one home, then designating another property as their second home and doing up that one as well.
Some have been accused of using the allowance to help them scale the property ladder at taxpayers' expense.
Changing which property is designated as their second home is a simple matter of notifying the House of Commons fees office which oversees MPs' expenses claims. Officials appear to accept an MP's word on trust.
Some have flipped several times, including Ms Blears. She was today reported to be fighting to keep her Cabinet job after it emerged that she had not only claimed on three different properties in the same year - 2004 - but avoided tax on the proceeds.
In March 2004 the Communities Secretary nominated her Salford constituency house as her second home, spending £1,500 on a bed, a TV and a video recorder. The following month she flipped the designation to her flat in Kennington, south London, and began to claim £850-a-month mortgage costs.
She sold the Kennington flat in August for £200,000, but avoided paying £18,000 capital gains tax on the £45,000 profit she made by telling Inland Revenue that it was her main residence, even though it was registered with the Commons as her second home.
In December, after several months in hotels at taxpayers' expense, she bought another flat for £300,000, this time in the trendy London area of Clerkenwell. She lodged claims for the £1,000-a-month mortgage payments and within four months had spent more than £6,500 on furniture. The house is now said to be worth £500,000.
She denies wrongdoing. "I have complied with the rules of the House, the rules of the Inland Revenue and that's the situation as it is," she said.
Mr Darling changed his designation four times in four years, it has emerged. The Chancellor billed the taxpayer £10,000 to furnish a flat in London, while switching his designation back and forth from his grand house in his Edinburgh constituency. The Edinburgh property is currently designated as his second home, while Mr Darling lives rent-free in 11 Downing St.
In 2005 Mr Lansley spent several thousand pounds redecorating a thatched cottage shortly before he sold it, and flipped his second home to a Georgian flat in London where he claimed thousands more in furnishings.
Mr Gove spent £7,000 on furnishing his property in west Kensington, before flipping his second home to a property he was buying in Surrey, enabling him to claim £13,000 in stamp duty and other fees on expenses.
Both Mr Lansley and Mr Gove have also been accused of breaching the spirit of the rules which prohibit MPs from buying luxury or premium-grade goods on expenses. They deny wrong-doing.
Mr Hoon did up his family home in Derbyshire at taxpayers' expense, before flipping his second home to a townhouse he was buying in London.
Meanwhile Margaret Moran, a Labour backbencher, designated her partner's seaside cottage that was neither in her constituency nor in London as her second home, and claimed £22,500 from the taxpayer for dry rot treatment.
Jacqui Smith's future as Home Secretary has been in doubt since it emerged earlier this year that she had named a rented room in her sister's terraced house in south London as her main home, allowing her to claim the costs of her family home in her Birmingham constituency. Her expenses also included the cost of pornographic films downloaded by her husband.
Even Gordon Brown has attracted raised eyebrows. As Chancellor, his second home was a one-bedroomed private London flat, where he claimed £650-a-month mortgage interest payments and most of his utility bills, despite having a grace and favour apartment several hundred yards away at 11 Downing St.
But when he became Prime Minister, Mr Brown flipped his designated second home to his family property in his Fife constituency, allowing him to claim its running costs while he and his family live in 10 Downing St.
Flipping would never have come to light if the Daily Telegraph had not published its series of revelations, beginning on May 8, based on an unauthorised and unexpurgated copy of MPs' expenses claims.
Members have been allowed to delete their addresses from the authorised version of the expenses that was due to have been published in July - thus hiding which property they were claiming for. Damaging correspondence with the fees office has also been deleted.
The House of Commons Commission is meeting today to decide whether to bring forward publication.
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