Cameron orders Tory MP to pay capital gains tax

A Tory frontbench MP who avoided paying capital gains tax on the sale of her taxpayer-funded second home will have to repay money, party leader David Cameron said today.

Shadow justice minister Eleanor Laing insisted she was obliged by law to name the property as her principle residence for tax purposes.

But Mr Cameron said the practice was unacceptable and that anyone guilty of it should be expected to be punished by the internal party scrutiny panel he has set up to examine claims.

"I don't think it is right to get money from the taxpayer for what you nominate as a second home and then to sell it and not pay capital gains tax," he told BBC1's Politics Show.

"I put a stop to that immediately, even before the House of Commons, with my MPs. That applies for the future. For the past we go through the scrutiny panel and if people have got it wrong then money will have to be paid back.

"John Butterfill is another case and we are addressing that one too," he said.

Asked if Ms Laing would follow Andrew MacKay in being forced out over expense claims, he said: "Where appropriate, others will be removed from the front bench if they do not behave appropriately.

"I want to very tough but I also want to be consistent and fair."

The Daily Telegraph said Epping Forest MP Ms Laing avoided a £180,000 bill on profit from selling the property - two adjacent flats in Westminster on which she was said to have claimed more than £80,000 in allowances. .

She sold the flats last year for £1.8 million, making at least a £1 million profit, the newspaper said.

In a statement responding to its report, Ms Laing said she had consulted solicitors at the time of the sale and guidance to MPs on the issue "which clearly states that the designation of Primary Residence for ACA purposes is not the same as the designation of Primary Residence for HMRC purposes.

"I realised, on investigating the rules, that it would be wrong in terms of HMRC under the Taxation of Chargeable Gains Act 1992 to pay Capital Gains Tax on my London flat because, although I had always regarded the flat as my second home, my main home being in my constituency, the definition of Principal Private Residence for Capital Gains Tax purposes is not a matter of choice but a matter of fact," she said.

"As a matter of fact, under HMRC rules, the London flat was my Principal Private Residence. I will, of course, be liable to Capital Gains Tax when eventually I sell my house in Theydon Bois as, under the HMRC rules, it is defined as my second home."

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