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Spygate scandal

06 November 2012 / Jesse Crozier , Ryan Hawthorne
Issue: 4378 / Categories: Comment & Analysis , Business , Companies , Income Tax
The McLaren case and the deductibility of corporate fines go under JESSE CROZIER and RYAN HAWTHORNE’s magnifying glass

KEY POINTS

  • Is a £32m fine for industrial espionage tax deductible?
  • The split decision of the First-tier Tribunal.
  • The principles of previous decided cases.
  • Is the purpose of the fine to punish or simply deter?
  • Is the tax treatment of penalties now uncertain?

It may be of little surprise that the Tax Justice Network found the First-tier Tribunal’s decision in McLaren Racing Limited v HMRC [2012] UKFTT 601 (TC) to be “extraordinary”.

However the wider surprise at the decision among accountants tax advisers and lawyers points to both the controversy surrounding the principle of deducting punitive fines and to the departure from previous decisions of the courts.

Indeed the judgment itself compounds the ongoing legal confusion surrounding the tax position of corporate fines to the extent...

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