MP couple broke expenses rules over flat

Two Tory MPs were rebuked today for claiming back tens of thousands of pounds in rent for a flat they effectively owned outright.

Parliament's sleaze watchdog ruled that Sir Nicholas and Lady Ann Winterton "unequivocally" broke the rules by channelling expenses cash to a family trust over the past two years.

The arrangement - designed to avoid inheritance tax - had also "arguably" breached Commons regulations since 2003, according to the Standards and Privileges Committee.

However, despite ignoring warnings from officials 16 months ago, the couple can keep claiming back rent on the £700,000 London property for a period of grace until September.

The Wintertons bought the flat in the early 1990s, and subsequently paid off the mortgage. In February 2002 they gifted the property to a family trust in order to sidestep death duties.

Since then the long-serving MPs have occupied it as tenants, and paid the trust market rent - currently £21,600 a year - using their Commons second home allowances.

The family is estimated to have received more than £120,000 in rent from the taxpayer, and could save hundreds of thousands of pounds in inheritance tax.

The Committee branded the system "unusual", and criticised the Wintertons for assuming existing arrangements would not be affected by the tightening of Parliamentary rules in 2003 and July 2006. The changes made it clear that MPs could not use second home allowance to pay themselves.

The MPs also highlighted that Commons officials had notified the couple 16 months ago that they were breaching regulations.

"In our view, the Wintertons have been in breach of the rules applying to the Additional Costs Allowance (ACA) since July 2006, a fact of which they were made officially aware in February 2007," the committee said. "This should have been addressed at an earlier stage."

The report accepted that the taxpayer had not suffered any direct financial loss through the arrangement, and the Wintertons had "at no stage" tried to conceal it.

The MPs also blamed blunders by Commons officials - who failed to reply to a key letter from Lady Winterton - for hindering a resolution.

But they stressed that "final responsibility rests with Members themselves for ensuring that their use of allowances is above reproach".

The MPs said that the Wintertons should have taken steps to fall in line with the rules before stories emerged in the press.

"Had they taken this course of action, they might reasonably have been expected to have made suitable arrangements by the end of the 2007 summer recess.

"We therefore recommend that no further claims should be paid against the ACA in relation to rent payable in respect of their current property from 1 September 2008.

"The Wintertons will by then have benefited from what amounts to a grace period of two years, which in our view is, in all the circumstances, more than adequate."

In their response to the Committee, Lady Ann and Sir Nicholas - the MPs for Congleton and Macclesfield respectively - complained of "unfair" treatment.

They insisted Standards Commissioner John Lyon, who gathered evidence for the report, had placed "disproportionate" blame on them rather than the Commons authorities.

"We are perfectly agreeable to share the responsibility but feel that we have not received fair treatment in this regard."

Matthew Elliott, chief executive of the TaxPayers' Alliance, condemned the Wintertons for continuing to claim back rent after the rules were tightened.

"Those MPs who have been exposed for breaking the spirit of the expenses rules, if not always the letter, have clearly let taxpayers down, but the Parliamentary Authorities are also to blame," he said.

"If the Fees Office had been tougher in applying the rules and if expense claims had been transparent and in the public domain, this sort of violation would never have happened."