McLaren Racing Ltd v CRC, Upper Tribunal
An employee of Ferrari’s Formula 1 team passed details about the manufacturer’s cars to the chief designer at McLaren. The Fédération Internationale de l’Automobile (FIA) carried out an investigation.
McLaren did not dispute that the designer had the information. But the company argued that the details had not been distributed to the engineering team and that the designer’s possession of the information had not been authorised by McLaren.
The FIA’s World Motor Sport Council concluded McLaren had gained an advantage. The body imposed a penalty of USD$64.5m. The company included the fine in its profits calculation as a deduction under TA 1988 s 74.
HMRC refused the claim. The taxpayer appealed.
The First-tier Tribunal decided the penalty had arisen from McLaren’s trade had been connected with its trade and had been incurred wholly and exclusively for the purposes of its trade. The taxpayer company was entitled to deduct...
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