Over the summer the Tax Tribunal decision in the McLaren Formula One cheating fine case has been overturned in HM Revenue & Customs favour. It appears odd that this has been little reported in the press given the heavy reporting of the original decision, but to quickly remind you of the facts, McLaren were handed out a hefty \u00a332 million penalty for breaking the motorsport governing bodies rules when it was found that one of their employees had used questionable methods to obtain technical information relating to another teams car.<\/p>\n
McLaren\u2019s team accountants had claimed the penalty as a deductible expense against tax. Originally the first tier tax tribunal decided that the penalty was an allowable expense, the argument being essentially that unlike a civil or criminal penalty which must be paid in order for the individual to avoid personal consequences, this penalty was paid to enable McLaren to continue to compete in Formula One thereby protecting the ongoing trade.<\/p>\n
Worryingly, the recent about-face by the upper tier tribunal appears at face value to be a moral decision rather than a factual one, based largely on the principle that cheating isn\u2019t right and therefore shouldn\u2019t be condoned through use of tax allowances.<\/p>\n
Whilst generally speaking I would applaud anything that encourages good moral behaviour in all walks of life, I am concerned that in this instance the comparison between a penalty within the tight confines of a sporting framework and a civil or criminal penalty is inappropriate and may be leading to a dangerous precedent.<\/p>\n
Rules and penalties in sport are all part of the game being played and not part of our criminal or civil code. If we accept that a sport can be a taxable activity then the costs of playing that sport should be taken into account in arriving at the taxable profits. McLaren were not prosecuted for criminal behaviour, they just broke the rules of their sport and were dealt with appropriately within the confines of that sport. For the taxman to wade into the argument is just wrong no matter how unsporting they may think McLaren have been. I wonder how many people would think it appropriate for a police officer to walk onto a rugby pitch to arrest a player for throwing a punch in a scrum?<\/p>\n","protected":false},"excerpt":{"rendered":"
Over the summer the Tax Tribunal decision in the McLaren Formula One cheating fine case has been overturned in HM Revenue & Customs favour. It appears odd that this has been little reported in the press given the heavy reporting of the original decision, but to quickly remind you of the facts, McLaren were handed[…] <\/p>\n