Contractors may well have been following the expenses scandal involving MPS with interest. This well publicised issue resulted not only in a custodial sentence for one MP but also criminal charges of false accounting against several others. It also led to the creation of the Independent Parliamentary Standards Authority (Ipsa) which was tasked to bring “independent oversight and control over MP’s expenses”.

Yesterday it emerged that a report produced by the Committee on Member’s Expenses has recommended that power should be reverted to MPs so that they can scrutinise their own expenses. The report has also recommended a possible “flat rate” expense scheme, the rate being dependent on how far an MP lives from parliament, similar to the way that Inner and Outer London weighting is added to MPs salaries now. Many newspapers and critics are reacting angrily to the Committee’s recommendations and have responded with disdain to the suggestion that value to the taxpayer would be improved by the removal of officials who have to check every single expense submitted by an MP. Although the Committee’s report appears to support removing the regulation of MPs expenses and return to the days of claims being allowed for moat cleaning etc. there is another side to the argument that has not been quite so well publicised.

Back in September of this year the Committee on Members Expenses produced a report indicating that because the inputting of expenses using the new system was so time consuming and costly, many MPs were paying monies from their own salary to cover the cost of claiming for expenses. It was a concern that the new system favoured personally rich MPs and that all MPs were not doing their job as well as they could because of the added administrative burden. More interestingly, the National Audit Office calculated IPSA's cost per claim as just under £16, with 38% of claims being for less than that average processing cost!

Whatever the outcome of this latest report, it would appear that the MPs expenses scandal and it’s fallout will continue and whilst it seems clear that the new system for MPs expenses is costly and unfair in some cases, it does provide valuable regulation to an area which has been terribly abused in the past by people who should be setting an example to the rest of us.

Castlemaine Associates commented; “The issue of expenses is a subject often close to the Contractor’s heart.  The submission of expenses is the only way of improving the financial return from an Umbrella Company and can also improve the return if a contractor has their own LTD company.  Contractors should, of course, only claim for legitimate expenses incurred during the course of their work but this fact is often blurred by “clever” accounting or the sometimes misleading “dispensations” offered by Umbrella Companies. Although there may be short term advantages to be gained by submitting “suspect” expenses claims, the fact remains that receipts must be kept for all expenses (whether a dispensation is used or not) and the expenses claimed must be legitimate. Even if an accountant may allow certain expenses, the final say always rests with HMRC and if a return is investigated they will almost certainly look at expenses claimed and will disallow any that are not legitimate resulting in the claiming back of unpaid taxes and a possible fine or legal action..”