POLICE chiefs are in hot water over unpaid tax on a £50 crossword prize in their staff magazine.

Durham Police offer a £50 cash prize to the winner of the puzzle in each edition of their in-house news pamphlet, Copper Plate.

Now Inland Revenue collectors have given the shock news that the prize is taxable.

It will mean an extra £60 on the force's tax bill, to save the competition winners from being taxed personally on their winnings.

The trouble started after a routine audit of force finances, carried out by tax inspectors.

Police chiefs mounted a robust challenge against the Inland Revenue's initial demands, which ultimately earned the force's paymasters a £4,004 refund.

But after clawing back the cash, the collectors returned to the force and insisted the crossword prize, awarded every two months, was a taxable benefit to any employee clever enough to win it.

Durham Police director of finance and administration Steve Cheston said: "On the face of it, they seem to be trying to get back the £4,004.

"But by my reckoning that will take them more than 60 years.

"This is another example of the increased bureaucracy and red tape that results in small amounts of money transferring from one public body to another.

"We could do without it. There has to be an easier solution.

"I don't have a problem with the Inland Revenue applying the rules, but in the case of the £4,004 they have had to refund us, they clearly applied the wrong rules in the first place."

Mr Cheston added: "It all seems very petty, but the force has reluctantly decided to meet the demand, which will cost us £60 a year.

"Past and future winners will not have to pay out themselves on the £50 prize money."

An Inland Revenue spokesman said: "We are only doing our job. It sounds worse because it is not a massive amount of money and is being given out as a prize.

"We are duty-bound to act on and enforce the rules."