TaxCorporate TaxF1 team McLaren denied tax relief for fine

F1 team McLaren denied tax relief for fine

£32m fine for corporate espionage not tax deductible, tribunal finds

ONE OF FORMULA ONE’s most successful teams McLaren has been told a £32m fine imposed by the sport’s governing body FIA is not tax deductible.

The fine was imposed in 2007 for breaching the FIA’s code after it emerged the team was caught trying to spy on rival Ferrari, according to an investigation.

McLaren took legal action after HM Revenue & Customs (HMRC) disagreed that it could deduct the fine in computing its taxable profits. However, a tax tribunal has now supported HMRC’s view.

A first-tier tribunal ruled the penalty was tax deductible. However, the upper tribunal has now supported HMRC’s appeal against that decision by ruling the penalty was not incurred wholly and exclusively for the purposes of McLaren’s trade and so was not an allowable deduction for tax.

HMRC director-general for business tax Jim Harra said: “We’re very pleased the Upper Tribunal agrees that the fine should not be given tax relief, which supports our view that most fines are not allowable as deductions against trading income.”

“This case shows that we won’t hesitate to go to court to make sure the right tax is paid.”

Related Articles

‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

5m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

5m Emma Smith, Managing Editor
Spring Budget 2017: Making Tax Digital

Business Regulation Spring Budget 2017: Making Tax Digital

9m Shereen Ali, Deputy Editor
Tax fraud loses HMRC £16bn

Corporate Tax Tax fraud loses HMRC £16bn

10m Emma Smith, Managing Editor
HMRC nets £2.6bn in corporate tax from big businesses

Corporate Tax HMRC nets £2.6bn in corporate tax from big businesses

11m Accountancy Age editorial
Tax crackdown brings in £468m for HMRC

Corporate Tax Tax crackdown brings in £468m for HMRC

11m Accountancy Age editorial
Treasury Select Committee report released on Making Tax Digital

Accounting Standards Treasury Select Committee report released on Making Tax Digital

11m Stephanie Wix, Writer