mclarens 49mil fine for cheating is tax deductable

[snoop1050]

http://news.bbc.co.uk/today/hi/today/ne ... 759000.stm

The British Formula One motor racing team McLaren has successfully argued that a £49m fine it had to pay for cheating is tax deductible.

unbelievable ! whats the point in f1 teams being fined as a punishment if this happens

[mzivtins]

The radio snippet does add a good point about the speeding fine though, why should that not be deductible?

In pure and simplest forms, the logic is sound.

[beelsebob]

The radio snippet does add a good point about the speeding fine though, why should that not be deductible?

In pure and simplest forms, the logic is sound.

They covered that in the snippet – it's not tax deductable because it's a fine levied for a criminal offense. The reason McLaren have been able to claim it's tax deductable was because it's not a legally enforcable fine, instead just a cost of doing business with the FIA.

[snoop1050]

means mclaren got away with copying and spieing on another team without any real punishment though?
mclarens argument seemed to be that the 49mil fine shouldnt effect there non f1 busisness but it wouldnt if they spent 49mil less on the car...

atleast one of the judges had the sense to be against it, its just a pitty the deciding vote pretty much made britain get a 49million penalty for mclarens cheating.

hopefully next time the fia give them a multi race ban instead or dont let them earn WDC points for multiple seasons

[phillippe]

The logic is fine if we detach ourselves emotionally from the so called impropriety of McLaren's conduct (so called because there were others who did the same but got away with it). It is an amount paid to a private body on the basis of private rules agreed between the body and other participants in an event organised by the private body; hence a regular business expense. But had the penalty been levied because of a statutory violation, then no deduction would have been permitted. I wonder if a deduction would have been permitted had McLaren paid this amount to Ferrari as damages for misappropriating intellectual property.

[phillippe]

means mclaren got away with copying and spieing on another team without any real punishment though?

No, McLaren still had a cash outflow of 49 million, which they would not have suffered in the absence of this penalty. Not to mention the loss of revenue from FOM for exclusion from the WCC. Now whether they need to pay x% tax on this 49 million (assuming this 49 million would not have been spent for other deductible expenses like further developing the car, hiring new personnel, etc.) or not, is irrelevant when analyzing whether McLaren were punished for the infringement.

[gridwalker]

A team who's title sponsor is synonymous with tax avoidance (see here : http://uk.reuters.com/article/2012/06/2 ... GO20120626) has found a way of using the tax system to their advantage? I am appalled, but not surprised in the slightest.

There goes my last shred of support for McLaren. I guess I'll be rooting for Sauber from now on.

[SeijaKessen]

That's what happens when your outfit is headed by Ron the Con.

[phillippe]

There is nothing wrong with structuring your operations in a legally permissible manner that minimizes tax liability. To this end, all multi national corporations have subsidiaries or special purpose vehicles in tax friendly jurisdictions. The article itself mentions it's completely legal. Of course, politicians have an interest in engaging in rhetoric and hysteria over such things. But we aren't politicians, are we?

By the same logic, all F1 drivers who are tax residents of Monte Carlo should be lynched!

[Pup]

Thank god for this thread. I was getting worried that CotA had permanently displaced McLaren as F1's top target for spitefully petty scrutiny.

[phillippe]

That's what happens when your outfit is headed by Ron the Con.

This is the norm irrespective whether a group is headed by Ron the Con, Luca the Saint or Mickey the Mouse.

[snoop1050]

There is nothing wrong with structuring your operations in a legally permissible manner that minimizes tax liability. To this end, all multi national corporations have subsidiaries or special purpose vehicles in tax friendly jurisdictions. The article itself mentions it's completely legal. Of course, politicians have an interest in engaging in rhetoric and hysteria over such things. But we aren't politicians, are we?

By the same logic, all F1 drivers who are tax residents of Monte Carlo should be lynched!

theres a difference between tax avoidance and tax write offs...

maybe the next time a driver gets a fine they will get a tax write off aswell

[SeijaKessen]

That's what happens when your outfit is headed by Ron the Con.

This is the norm irrespective whether a group is headed by Ron the Con, Luca the Saint or Mickey the Mouse.

Oh no, with Ron financial hijinks are the norm.

Just ask Bob Lutz about that.

But really, what does one expect when he claimed to have no knowledge of NigelS's information?

[wesley123]

whats the big deal with this?

Just saying, having to pay tax or having tax write offs etc. etc. are quite normal in any bussiness.

[beelsebob]

whats the big deal with this?

Just saying, having to pay tax or having tax write offs etc. etc. are quite normal in any bussiness.

Agreed, I don't get why everyone's getting quite so worked up about this.