You help pay for flat, then parents buy it

Dr Evan Harris sold the flat to his parents for £200,000 more than he paid for it in 1997.

Evan Harris sought permission from the fees office to increase his mortgage by £67,000 to cover a deposit he paid when buying his Westminster flat and to extend the lease, thereby enhancing the value of the property.

Dr Harris, the MP for Oxford West and Abingdon, told officials that he needed part of the enlarged mortgage to repay £27,000 which he had borrowed for the deposit from his parents, Brenda and Frank, a respected university professor.

That request was declined, but he was allowed to increase the mortgage to pay for the £40,000 cost of extending the lease. As a result, his claims for mortgage interest went up from £519 to £781 a month.

The MP's application to put the cost of remortgaging on his expenses appeared to have raised concern among officials. In a memo, a senior member of the fees office wrote: "I got the impression of a man under some pressure ... loan of money from his parents ... he needed to pay the money back to them."

After remortgaging, Dr Harris claimed the £1,050 legal fees and £881 surveyors' bill on his expenses.

Three years later, in the autumn of 2008, he sold the one-bedroom flat to his parents for £350,000, at a time when property prices in the capital had collapsed as a result of the recession. Land Registry documents show that they bought the property without taking out a mortgage.

Dr Harris sold the flat to his parents for £200,000 more than he paid for it in 1997. He then bought a new flat for £730,000 a short walk away.

The MP said yesterday that the price paid by his parents was based on an estate agent's valuation in August, shortly before the collapse of the market. Insisting that the sale abided by "best practice", he added: "It is no secret that my parents bought the flat. All my friends know this and I told the local paper last week."

The MP added that it would have "short-changed" the taxpayer not to have bought the lease because the value would have fallen.

During the two years running up to the sale, Dr Harris spent more than £6,600 of taxpayers' funds doing up the apartment. He said: "I have not identified any allowances claimed which were inappropriate. I will pass over to the taxpayer any capital gain financed by allowances when I no longer need a flat for work. This means the taxpayer is no worse off and perhaps even better off as a result of the way I have used the second home allowance.

"I am very confident that I have acted entirely appropriately in terms of claims made as a Member of Parliament."

Mr Harris said that he paid capital gains tax when he sold the flat to his parents. He added: "I have sold a second home without avoiding CGT, without benefiting a family member and without refurbishing it first."


SNAPSHOT

Evan Harris

Job: backbench Liberal Democrat MP for Oxford West and Abingdon

Salary: £64,766

Total second home claims

2004-05: £16,547

2005-06: £21,085

2006-07: £21,269

2007-08: £23,081