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tax-deductible fines

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HowardKennitby | 08:33 Thu 11th Oct 2012 | News
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This goes back several years to when McLaren F1 team were found to have been spying on Ferrari and pinching details of the technology. The FIA fined McLaren umpteen $M.

Short report on the 'Today' prog this morning indicates that it is still being discussed/argued about by HMRC and various tribunals etc as to whether this 'fine' is tax-deductible.

From what I heard it seems there is a reasonable chance McL will succeed and that they will be able to offset the 'fine' against profit.
Who says crime don't pay.

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I thought Today missed a trick, because right in the news today was the very similar case of the premium rate phone companies being fined:

http://www.bbc.co.uk/news/uk-19906083

If McLaren get away with it then presumably the phone companies should too ...

That said, I can see McLaren's point. They are being asked to pay tax on £40M that they don't have. That's a lot of money, and definitely worth an argument.
Well there's a difference surely between a fine that's imposed by the governing body of a sport and one that's imposed by the courts or an arm of Government.
Good point, jake
There is no crime and no fine, these are legal terms. This is an internal issue in a sporting association. This about whether a "fine" by a sporting body constitutes an expense, I'd say that it does and is therefore tax deductable.
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^

That seems to be gist of McL's argument.

Obviously if the 'fine' had been imposed by an actual UK court the question would not arise.

Any company wishing to take part in F1 has to sign up to the FIA's rules.

It seems this can/may cause subtle changes in what is meant by 'business expense' and 'trading' and it is on this that McL is pinning its hopes.

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