Court rules there's no tax relief for McLaren fine
Formula 1 racing giant McLaren has lost its claim that a 拢32 million fine imposed against it by the sport鈥檚 governing body should be tax deductible.
McLaren took legal action after HM Revenue and Customs (HMRC) disagreed that it could deduct the fine in computing its taxable profits. However, a tax tribunal has now supported HMRC鈥檚 view.
HMRC鈥檚 Director General of Business Tax, Jim Harra, welcomed the ruling:
We鈥檙e 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鈥檛 hesitate to go to court to make sure the right tax is paid.
The 拢32 million penalty was imposed on McLaren by the sport鈥檚 governing body, the F茅d茅ration Internationale de l鈥橝utomobile (FIA), in 2007 for breaching its International Sporting Code.
A First-tier Tribunal ruled the penalty was tax deductible. However the Upper Tribunal has now supported HMRC鈥檚 appeal against that decision by ruling the penalty was not incurred wholly and exclusively for the purposes of McLaren鈥檚 trade and so was not an allowable deduction for tax.