Kent County Council leader Paul Carter
Kent County Council paid independent financial advisers more than £5,000 to challenge a ruling that councillors pay tax on their travel expenses, we can reveal.
And the authority's Conservative leader Paul Carter was so determined to resist the move, he told Her Majesty's Revenue and Customs' (HMRC) most senior executive he would only go ahead if it was applied to every single councillor and school governor in the country.
The extraordinary lengths the council went to as it battled to prevent councillors' expenses being taxed are revealed in documents released to the KM Group.
They show tax advisers RSM Tenon were paid £5,382 over three years to challenge HMRC's ruling. The money was paid on top of a yearly £3,000 retention fee the same company receives for other tax advice.
But the company itself told Kent County Council the decision was not unexpected.
It followed a lengthy investigation by government tax officials that concluded councillors should be paying tax on car journeys from home to County Hall.
The issue came to a head last month, when - in a bid to neutralise the impact the ruling would have - KCC put forward a proposal to increase by 47% the mileage allowance for its 84 members.
A public backlash forced a hasty retreat, but the documents released to the KM Group show how far KCC went to block the move.
Cllr Paul Carter defended the expenditure on tax advisers, saying it was money well spent to try to clarify what was confusing and contradictory tax advice provided by HRMC.
He said: "We got the best advice we could to stay the right side of the law. Professional opinion was very mixed [about HMRC guidance] and we wanted to avoid a situation where we got unnecessary bureuacracy because of a badly-worded piece of guidance. Most people would probably say 'well done' to Kent."
In the context of the council's overall budget, the figure - covering three years - was relatively modest, he added.
Correspondence between Mr Carter and the HMRC underlines just how concerned Kent County Council was.
In a letter to HMRC chief executive Lin Homer in April, Mr Carter complained: "Councillors get a very modest allowance and it is increasingly difficult to attract people into local politics. We're being penalised for the size of the county and that is grossly unfair."
He then issued the HMRC with an ultimatum, writing: "I need your absolute assurance that this system will apply to all elected members across the country, as well as other similar types of roles, such as school governors and non-executive directors in the public sector."
But his letter did not get a direct reply from Ms Homer.
Instead, a complaints officer from HMRC wrote back to say "what we cannot agree is that for every Kent councillor, their home is regarded as a workplace... HRMC has a duty to apply the law correctly and to treat all its customers equitably."
Mr Carter returned to the fray in June, writing another letter to Ms Homer appealing for a rethink and saying "once again... I am extremely disappointed by the decision reached".
His letter says tax rules are different for MPs and councillors, writing: "I fail to see how this would pass any test of equality or fairness." It seems that HMRC declined to reply.
KCC was criticised by the Taxpayers' Alliance. Campaign director Robert Oxley said: "It was bad enough that councillors tried to lump local residents with the tax bill for their expenses, but it's simply astounding that they had the cheek to use taxpayers' money to try and find a loophole to justify this shoddy arrangement.
"This bill is a damning indictment an attitude of entitlement at County Hall. It's a shame that councillors don't work as hard at providing value for money as they do at feathering their own nests."
The tax advisers asked by Kent County Council to see what grounds there may be to appeal against the ruling appeared to expect it would fail.
In an e-mail sent to a council finance officer in March this year, an unnamed member of the company writes: "As expected, HMRC have refused this request" adding that, while he disagreed, "if councillors are not content with the view of HRMC, I would suggest any challenge would need to be made on a national basis".
County councillors claimed £130,594 by way of car mileage expenses in 2012-13 to get about on council business and attend meetings.
Every member is entitled to claim 45p a mile on council business, such as attending County Hall meetings. The rate was increased in 2011 from 40 pence.
More than a third relied exclusively on their cars for council business, making no claims at all for public transport.
However, 18 members claimed no travel expenses at all - five more than the previous year.
HMRC has told Kent County Council that unless they could provide conclusive evidence that they routinely see constituents at home, members' journeys to meetings must be treated as private mileage.
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