MP faces tax row over country house

Sir John Butterfill is said to have lodged claims under second home allowance for his six-bedroom country house, complete with swimming pool and extensive grounds.

At the time he designated a small flat in his Bournemouth West constituency, bought for £56,000, as his "main residence" for the purposes of Commons expenses.

But when he sold the country house for £1.2 million in 2005, he informed HM Revenue & Customs that was his main home, meaning he was exempt from capital gains tax, according to the Daily Telegraph.

The property in Woking, Surrey, reportedly doubled in value while the taxpayer was handing over up to £1,778 a month towards interest on the mortgage. Sir John also claimed back council tax bills for the "staff annex", where his housekeeper and odd-job man lived.

If the MP had not made contradictory statements to the taxman and the Commons, he would either have been unable to claim allowances on the larger property, or would have faced capital gains tax at 40% on profits from the sale.

The claims are likely to cause alarm in the Conservative leadership, with David Cameron working hard to distance his party from the lavish expenses-funded lifestyles enjoyed by some MPs.

Sir John, treasurer of the prestigious 1922 committee of Tory backbenchers, told the Telegraph he had spent up to £500,000 of his own money transforming the house "from a wreck".

His profit from selling the property was therefore more like £100,000 than £600,000, he said.

But Sir John is now expected to pay at least £40,000 in capital gains tax, and has apparently agreed to refund more than £20,000 for the claims he made for his staff annex and repairs on the Bournemouth flat. That would make his expenses repayments the highest of any MP to date.