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Hazel Blears, the Communities Secretary, facing fresh questions over flat sale in row over MPs' expenses

Hazel Blears is facing fresh questions over the tax arrangements surrounding the sale of a flat in South London she had designated as a "second home'.

 
Hazel Blears is facing fresh questions over the tax arrangements surrounding the sale of a flat in South London: MP's expenses
Secretary of State for Communities and Local Government, Hazel Blears Photo: GETTY

Miss Blears sold the property in Kennington, south London, in August 2004 for £200,000, making a profit of £45,000. She admitted last night that she did not pay capital gains tax (CGT) on the profit from the sale because "no liability" had arisen.

The admission suggested that Miss Blears declared the flat as her primary residence for tax purposes while at the same time telling the Commons authorities that it was her second home, a designation that enabled her to claim hundreds of pounds in parliamentary expenses.

CGT is liable to be paid on the profit from the sale of any property that is not classified with HM Revenue & Customs as a "main residence". At the time of the sale Miss Blears had informed the Commons authorities that the Kennington flat was her second home, enabling her to claim mortgage interest payments on it at £850 a month. The Telegraph's investigation into MPs' expenses established that Miss Blears had claimed for three properties in a single year at taxpayers' expense.

In March 2004 she stated to the Commons that her second home was a property in her Salford constituency, which she has owned with her husband since June 1997. During March 2004 she bought an £850 television and video recorder and a £651 mattress for this home.

In April 2004 she redesignated the Kennington flat as her second home with the Commons. After selling it four months later she spent taxpayer-funded nights in hotels in London, including the Zetter in Clerkenwell, where rooms cost £211 a night.

In December 2004 she bought another London flat with a mortgage of more than £1,000 a month and claimed it as her second home. Over the next four months, she claimed for groceries, furniture worth £4,874, a bed at £899 and £913 for a new TV.

Miss Blears's spokesman said last night: "Hazel has complied with the rules of the House authorities and the Inland Revenue. No liability for CGT arose on the sale of her flat in Kennington."

Tax experts said it was possible for Miss Blears to have designated the flat differently for the Commons and for HM Revenue & Customs.

Mike Warburton, a tax accountant at Grant Thornton, said: "The Inland Revenue rules work entirely independently of the parliamentary arrangements. It is open to anybody to elect which of their homes is their principal residence for capital gains tax. They will then not pay tax on the profit."

Matt on MPs' expenses
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