MPs may be sued over their second home profits if they refuse to hand over part of the profits they have madeStandards authority will sue MPs who fail to return share of capital gainsAt least 10 MPs still to comply with expenses watchdogMPs forced to pay up tens of thousands since expenses scandal



01:11 GMT, 24 December 2012

Former environment secretary Sir Jim Paice has agreed to pay 10,000 back to to the taxpayer

Former environment secretary Sir Jim Paice has agreed to pay 10,000 back to to the taxpayer

The Commons expenses watchdog is preparing to take legal action against MPs who refuse to hand back a share of the profits they have made on taxpayer-funded second homes.

The Independent Parliamentary Standards Authority said it is looking at suing MPs who fail to return a share of the 'capital gain' from the increase in value of their homes over two years.

They will be asked to hand over thousands of pounds even if they have not sold their house in the meantime.

Taxpayers are due the cash because of a deal struck in the wake of the expenses scandal, when parliamentarians were banned from claiming mortgage interest on their second homes.

Under the deal, MPs were allowed to opt to continue to claim expenses for mortgage interest for a transitional two-year period.

Dozens of MPs decided to do this, and most have already paid up – with some facing bills running into the tens of thousands of pounds.

At least 10, however, have still failed to reach a deal with the expenses watchdog – three weeks after a deadline for arranging payment passed.

A lawyer working for some of the MPs has questioned IPSA's ruling and told the Independent on Sunday that they could request a judicial review of the decision.

Some of the MPs claim the value of their homes has not risen at all, and say it is wrong for them to return any supposed increase.

In response, IPSA has also taken legal advice and has been told it is not allowed to claw back the money by withholding payment of MPs' allowances.

A spokesman for the watchdog said: 'Hopefully there will be no need for legal activity that will coerce anyone into paying.

'But if we have to go down the legal route we are fully prepared to do it. When MPs signed up to this deal, they did it on the condition that, if there was a capital gain, the taxpayer would get a share.'

As part of the transitional arrangements, some 71 MPs were allowed to claim almost 1million in mortgage interest between May 2010 and August this year, when the ban took effect.

As part of the deal, however, they agreed to share the profit from any rise in the value of the property in the meantime.

IPSA demanded two professional valuations of their properties from each MP – at the start and the end of the transitional period – and used them to calculate the amount due.

Former environment secretary Sir Jim Paice, who claimed more than 9,000 in mortgage interest, told the Independent on Sunday: 'I can confirm I have received a request and have agreed the sum to “repay”. It is nearly 10,000 and in fact represents almost all the interest claimed since the 2010 election.

'As it is effectively a “paper” gain because the property has not been sold, I have agreed a repayment schedule to be completed by the next general election.'

Treasury minister David Gauke, who made a 67,500 profit when he sold his second home, has already returned 40,000 to IPSA.

One MP who has still failed to agree any payments told the paper: 'People signed up to the terms, but they did not expect to be charged anything if their homes have not risen in value.

'This has not been a great time for house prices. It is not fair to make anyone pay for something they have not received.'

In a letter to IPSA, Pater Vaines, the MPs' lawyer, argued that there is no 'statutory or any other authority for IPSA to require any such payment regarding such notional gain.'

He said the threat of having to repay the sums 'has created unjustifiable anxiety to members'.