Flipper Hazel Blears, her three homes.. and the £18,000 tax bill that never was

Cabinet Minister Hazel Blears is facing fresh questions after it was revealed she did not pay tax on the sale of her former London home.

The Communities Secretary sold the flat in Kennington for £200,000 in August 2004, earning her a £45,000 profit. She had claimed expenses on it by declaring it a second home.

Normally the profits on any property which is a second home are liable for capital gains tax (CGT) of up to 40 per cent. In this case that would have been about £18,000.

Her spokesman confirmed last night she did not pay CGT after advice from the taxman because for most of the time when she had owned it the flat was her main home.

But Miss Blears had told the Commons Fees Office in April that year that the flat was her second residence - enabling her to claim £850 a month for the mortgage.

The controversy follows criticism of Miss Blears last week over the practice of ‘flipping’, where MPs change the designation of their second home to net maximum allowances.

She is known to have ‘flipped’ status three times in a year - enabling her to claim up to £20,000-a-year for each property.

Outside her Salford home this morning, Miss Blears again insisted she had complied with all the rules.

'I have complied with the rules of the House, the rules of the Inland Revenue and that's the situation as it is,' she said.

'But I understand how strongly the public feel about it and they hate all of this and that means we have got to get it sorted out as quickly as possible.'

It was the system that was 'wrong', she claimed, and called for an independent body to be set up to work out a fairer way for the pay and perks scheme to work.

Last week, when the expense claims were first revealed, the minister said she had only ever had a small flat in London and lived mainly in Salford.

But Land Registry records reveal that since becoming an MP in 1997 Miss Blears has owned three flats in London and has sold the first two.

As a result she has climbed the property ladder. She now lives in a flat in Clerkenwell, Central London, worth about £500,000 - some £200,000 more than she paid five years ago.

But despite claiming thousands in subsidies on it, none of her neighbours who spoke to The Mail on Sunday could recall seeing her there.

In June 1997, a month after being elected, Miss Blears bought a house in Salford for about £130,000. It is now worth about £300,000.

In March 2004 she designated it her second home and during that month she spent £850 on a Selfridges TV and video and £651 on a mattress from Marks & Spencer.

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Andrew Rawnsley, the broadcaster and political commentator, said: "No wonder Parliament put up such a protracted and bitter struggle to try to keep all this hidden from the voters. They should stop whingeing about The Daily Telegraph's drip feed of revelations from a leaked disc. MPs themselves ­created the black market in the information about their claims by trying to conceal what they had been doing for so long."

Some MPs have attacked the Daily Telegraph for disclosing details of expenses abuse and the House of Commons has made a complaint to police to investigate the source of the leaks.

Tim Montgomerie, the political blogger, and founder of the website ConservativeHome, wrote that the Telegraph had done a "great public service" in exposing the expenses scandal.

"Labour MPs have been busy shooting the messenger today and there is loose talk of the Telegraph being prosecuted. I don't think there's a jury of free men and women in this country who would convict the Telegraph. They'll triumph if they say they were acting in the public interest," he wrote.

"Only by the Telegraph publishing this data in the way it has have we learnt the full scale of what MPs have been doing. MPs had passed a new statutory instrument that would have meant the official July release would have kept MPs' addresses secret."

Alastair Campbell, Tony Blair's former spokesman, said that ministers and MPs had "no excuses" for milking the system of taxpayer-funded Commons expenses.

Writing in his blog, he said he was "genuinely surprised" by some of the things MPs had been claiming for.

"A brief skim around The Daily Telegraph website is certainly challenging reading for someone who chooses in the main to defend politics and politicians," he wrote.

"I don't get shocked by much, but I was genuinely surprised by some of the things MPs are entitled to do and claim for.

"The question in MPs' minds as they submit expenses should not be 'can I get away with this?', nor even 'how will it look?', nor even 'is it within the rules?', but 'is it right?' Many expenses claims are justified. Many are not."

Mr Campbell joined calls for the Commons to release the full details of all expenses immediately ahead of the planned date in July.

Peter Preston, the media commentator and former editor of the Guardian, said that it was right for the Telegraph to reveal the expenses - ahead of the European elections and before they were officially released in July.

"Why let this slither away into the ides of mid-summer when ordinary folk push off to the beaches and ministers traditionally unload their stinking fish?

"Joe Public is voting in three weeks' time. He needs to know about [John Prescott's] toilet seats and Hazel's [Blears] flat-screen TVs now. Sign the cheques and batten down the hatches, then: publish and be damned."

Former politicians, commentators and bloggers backed the investigation that has set the news agenda in the past few days.

Tim Montgomerie, the political blogger, and founder of the website ConservativeHome, wrote that the Telegraph had done a "great public service" in exposing the expenses scandal.

"Labour MPs have been busy shooting the messenger today and there is loose talk of the Telegraph being prosecuted. I don't think there's a jury of free men and women in this country who would convict the Telegraph. They'll triumph if they say they were acting in the public interest," he wrote.

"Only by the Telegraph publishing this data in the way it has have we learnt the full scale of what MPs have been doing. MPs had passed a new statutory instrument that would have meant the official July release would have kept MPs' addresses secret."

Alastair Campbell, Tony Blair's former spokesman, said that ministers and MPs had "no excuses" for milking the system of taxpayer-funded Commons expenses.

Writing in his blog, he said he was "genuinely surprised" by some of the things MPs had been claiming for.

"A brief skim around The Daily Telegraph website is certainly challenging reading for someone who chooses in the main to defend politics and politicians," he wrote.

"I don't get shocked by much, but I was genuinely surprised by some of the things MPs are entitled to do and claim for.

You've got to admire the bare faced cheek of Blears - she takes the tax payer for as much as the system will allow and then, to pathetically try to save face (and her seat), she calls for an independant enquiry into the same systems that she lined her pockets with.

There's not a single MP I trust. In one way or another, they're al doing the same thing.

Steve.