Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

On the blog

20 July 2010 / Mike Truman
Issue: 4264 / Categories:
MIKE TRUMAN highlights some blog entries from

In the absence of our online editor on holiday, I thought it might be worth drawing your attention to a few blog entries from our website. Sometimes technical, sometimes just whimsical, but always tax-related in at least a vague way, the blog is where we put things that you don’t necessarily NEED to know for your work, but might find interesting.

The first item proved interesting enough for the Sunday Times to pick it up last weekend.

MPs tax-free commuting

The latest Finance Bill just covers the really important things. The changes to CGT, VAT and corporation tax rates. The power to repeal the changes to higher rate relief on pensions.

And MPs’ expenses. Like I said, the important things...

Sch 4 changes ITEPA 2003, s 292 to provide a similar relief on the new accommodation allowance as there was on the old. But it also introduces a completely new relief on travel expenses, ITEPA 2003, s 293A.This exempts allowances paid for travel between the constituency and Westminster, which is not unreasonable, as they are both permanent places of work - see para 3.20 of Booklet 490.

But it also gives MPs a tax-free allowance for the costs of travel of up to 20 miles to and from their home, if they live outside the constituency; an allowance which no other employee would get  at all, let alone tax-free.
I have commented before that it seemed MPs have always had such a relief, but it was previously by secret concession. It was obviously too much to ask that they would lose it in the clean-up of their expenses.

I asked the Independent Parliamentary Standards Authority why they got this relief, and they gave me this statement:

‘The new rules governing MPs’ expenses are designed to enable MPs to carry out their parliamentary duties effectively.

‘MPs with constituencies outside of London can claim for journeys between any point in their constituency, or a home or office within 20 miles of their constituency, due to the fact that not all MPs live directly within it.

‘IPSA was set up in the wake of the expenses scandal last year as an independent regulator to provide, after consultation, an expenses scheme for MPs in the new Parliament. This it has done, moving from allowances to expenses, properly incurred, and providing a scheme which is fair, workable and transparent.’

Just how is it ‘fair’ to allow MPs to give themselves tax relief on home-to-work commuting when it is denied to every other employee? 

Hard to swallow

The Telegraph published a consumer guide recently to help readers avoid paying VAT on their groceries. The piece recommends that thrifty shoppers eschew standard-rated potato crisps, ready-made popcorn, prawn crackers made from cereals, shelled roasted or salted nuts, ice cream and ice lollies, and chocolate-coated biscuits.

Zero-rated alternatives will help save a few quid: crisps made of other vegetables, microwave popcorn, prawn crackers made from tapioca, roasted or salted nuts still in shells, frozen ready-meals and baked Alaska, and chocolate chip biscuits.

The article’s authors, Rosie Murray-West and Kara Gammell, reveal that an individual who follows their advice will keep hold of a whopping £6.48 (about £2 less than the saving to be made by not buying the Mailygraph for a week).

I suggest that cash be put away to help pay for the private treatment of the scurvy, obesity, diabetes and heart trouble that will result from the diet suggested by Ms Murray-West and Ms Gammell, who perhaps don’t know that fruit and veg are also zero-rated. 

We are sailing

With impeccable timing, I managed to book a cruise in the Med (leaving from Barcelona and returning to Malaga) for the week of the Budget. It was inevitable that on 22 June I would be thinking about tax, and I logged on from a wi-fi hotspot in Cannes to see what had happened.

There is, however, less excuse for me being so tax-nerdish as to query why Spanish VAT was still being added to my bar bill as we sailed from France to Italy.

With help from Neil Warren, I have found the relevant paragraphs: VATA 1994, Sch 4A, paras 5 and 6, which set out the new place of supply rules from January 2010.

Para 5 says catering supplies are normally treated as made where they are carried out, which will often be international waters and outside the scope, but that is overridden where para 6 applies.

Para 6 applies to catering on ‘intra-EU’ journeys, that is ones which start and end in the EU, and where passengers do not have the opportunity to get on or off at a non-EU port during the journey.

So the trick is to add in a stop at, say, Guernsey in a cruise leaving from and returning to Southampton. But Guernsey doesn’t have a deep harbour, so the ships anchor offshore and people go ashore by tender. If the weather is too rough for tenders, does that mean all bar bills for the whole cruise haverto have VAT retrospectively added on?

Issue: 4264 / Categories:
back to top icon